A remarkably stable picture of the housing market has come from the Department of Communities and Local Government.
It came 24 hours after the Royal Institute of Chartered Surveyors had reported a balance of 92.9 per cent of its members saying house prices were falling and the weakest level of activity for 30 years.
The DCLG said that although average house prices fell by one per cent in the three months to April, they were still showing a year-on-year increase of 4.9 per cent.
The West Midlands saw a smaller annual increase – just 1.9 per cent – than any other region except the East Midlands with 1.2 per cent.
Between March and April the strongest increase was in the average price for terraced houses. They rose by 1.3 per cent, the DCLG said, while both semi-detached and detached homes went 0.8 per cent higher. This was partly offset by a 0.3 per cent dip in the average price for flats.
These findings contrast with those from both Halifax and Nationwide, which recorded fall of 3.8 per cent and 4.4per cent for the 12 months to May and drops of 2.4 per cent and 2.5 per cent in the latest month.
But the DCLC numbers are for April and based on mortgage completions, so lag behind those from the big lenders.
A DCLG spokesman commented “When looking at trends in the market, it is important to remember that UK house price are 44 per cent higher than five years ago.
“The current issue affecting the market is fundamentally about the supply of credit – a very different situation to the early ‘90s, which was about high interest rates and unemployment.
“The long-term demand for housing remains high and the fundamentals of the economy are sound with low unemployment and low interest rates.”
Howard Archer, UK economist at the consultants Global Insight refused to be reassured, describing the tone of the RICS survey as “very weak”.
“Potential house buyers now have to provide higher deposit levels, which is a major problem for first-time buyers,” he said. “Very weak sentiment over the housing market heightens the risk that house prices will fall sharply over the next couple of years, while unemployment is now starting to rise, which could lead to more people having to sell for distressed reasons.
“Finally, growing speculation that the Bank of England’s ultimate next move could be to raise interest rates rather than lower them is bound to weigh down on the housing market.”
Global Insight now expects house prices to fall by 12 per cent his year, then by another 12 per cent in 2009 – with “significant downside rises to this forecast, particularly if the Bank of England does end up raising interest rates”.
Meanwhile, Chris Wood, vice president of the National Association of Estate Agents, has called on the Government to intervene in the mortgage market to help kick start property sales.
He said: “Undoubtedly, the reduction in mortgage availability has had a huge knock-on effect, and both consumers and the industry need assistance from the Government and relevant bodies to help relieve these current restrictions on the mortgage market.
“If the shackles can be removed then the flow of buyers can start to move once again.”
His call came as Chancellor Alistair Darling and Housing Minister Caroline Flint held one of their regular meetings with mortgage lenders.
The Treasury declined to comment on exactly what was being discussed but said it was part of the Government’s ongoing work to see what steps could be taken to help borrowers who got into difficulties.