British house prices were static in the first half of this year as affordability constraints prevented people getting on to the property ladder, figures showed today.
Britain's biggest mortgage lender, Halifax, said prices edged ahead by just 0.1 per cent during June, but the three rises seen so far this year have been cancelled out by monthly falls.
At the same time the bank said annual house price inflation for the year to the end of June fell to just 3.7 per cent, its lowest level since March 2001.
The figures are in line with those reported by Nationwide Building Society last week that showed annual growth of just 4.1 per cent. Evidence that the housing market has slowed down increases the scope for the Bank of England's Monetary Policy Committee (MPC) to reduce interest rates.
But it is thought the committee, which is due to announce its decision on the cost of borrowing at noon today, will keep rates on hold despite signs that the economy is coming under increasing strain.
Instead the MPC is expected to wait until August, when it issues its latest quarterly inflation report, to cut rates for the first time in two years.
Martin Ellis, Halifax chief economist, said a combination of higher interest rates and the increasing affordability problems faced by people wanting to get on to the property ladder had caused prices to stagnate.
But he added: "Housing market activity has stabilised following the sharp decline in the second half of 2004 with some signs of a steady improvement in recent months.
"The number of loans approved for house purchase increased for the fifth successive month in May, and Halifax Estate Agents has seen a steady level of sales since February."
Halifax said that during June annual house price growth fell below average annual earnings growth, currently 4.2 per cent, for the first time since 2001.
It said rises in earnings were expected to continue to outpace house price growth during the second half of the year, causing the house price to earnings ratio to fall from its current level of 5.5, easing the problems faced by first-time buyers.
