Affordability 'causing house price falls'

Britain's house prices fell again last month, new figures have revealed.

The Halifax House Price Index for May has revealed that last month saw a 2.4 per cent drop in prices.

In addition to this, the annual rate of house price change is now a fall of 3.8 per cent.

This makes the average UK house price a seasonally adjusted £184,111.

Halifax chief economist Martin Ellis said a combination of the squeeze on incomes by inflation, rising house prices in recent years and the credit crunch were all causing the falls.

Such trends may prompt some looking to get on the housing ladder to consider self build as a way of obtaining a house at a cost much less than the value of it, thus giving a buffer against negative equity.

Writing in the New Statesman magazine, political columnist Ian McWhirter predicted that the housing downturn will turn out to be more severe than that of the early 1990s.