House prices fall 1.7% in April: Halifax

As a result, the average house price has returned to where it was five years' ago in April 2004, standing at £154,511.

According to the latest house price index from Halifax, April's fall also means that the annual fall is now 17.7 per cent.

In addition, the house price to earnings ratio – a key affordability measure - is at its lowest for more than six years.

It has declined by 27 per cent, from a peak of 5.84 in July 2007 to an estimated 4.26 in April 2009.

House prices in the three months to April compared with the previous three months - an indicator of the underlying trend - were 3.3 per cent lower.

This is slightly below the quarterly rate of decline of 5 to 6 per cent recorded consistently between June 2008 and January 2009.

Meanwhile, monthly repayments for the average mortgage borrower have fallen from a peak of 26.9 per cent of average gross household income in October 2008 to 22.0 per cent in March 2009.

A decrease in the average mortgage rate paid by existing borrowers from 5.82 per cent in October 2008 to 3.83 per cent in March 2009 is the main cause of this reduction.

The Halifax index also revealed tentative signs of a stabilisation in activity, albeit at a very low level.

Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase increased by 19 per cent between the final quarter of 2008 and the first quarter of 2009.

Furthermore, approvals in March, at 39,230, were the highest since May 2008, but were still 34 per cent lower than in March 2008.

Martin Ellis, housing economist at the Halifax, said: "The house price to earnings ratio – a key measure of housing affordability – is at its lowest level since the autumn of 2002 at 4.26.

"Mortgage rate cuts have reduced monthly payments for the average existing borrower by £111 since October 2008, also boosting affordability. Mortgage approvals remain at historically very low levels.

"Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months. As a result, further house price declines are likely."

Nationally, house prices declined by 2.7 per cent in Q1 this year. This was the smallest quarterly fall since Q1 2008 (-1.4 per cent), tentatively indicating that the trend rate of decline may be beginning to stabilise.

David Smith, senior partner at Carter Jonas estate agents, said: "The immediate reaction is to look at April's 1.7 per cent fall as yet another setback for the housing market, but it could be construed as a positive.

"It is a reflection of the fact that vendors, in recent months, have become considerably more realistic about what they can achieve for their properties in the current climate, which is no bad thing.

"It's realism like this that will bring the genuine recovery in the property market forward rather than put it off."