House prices 'dropped 1% in June'

Various predictions have been made about house prices

House prices in England and Wales fell by 1% in June leading to a tiny rise of 0.1% over the year, according to the Land Registry.

This was the tenth consecutive month of falling annual price inflation, the Registry said.

The month-on-month fall pushed the average price of a home in England and Wales down to £180,781.

The fall was particularly marked in London which saw prices drop by 2.5% compared with May.

The North East of England was the only area to see a monthly rise in prices, up 4.1% in June and 3.1% for the year. That made the average house price in the region £133,508.

Sales volumes also remained much lower across England and Wales than a year ago.

Falling or rising?

The figures came on the same day the National Housing Federation said average house prices in England were set to rise by 25% by 2013.

David Orr of the National Housing Federation explains his projections

It sees prices falling 4.4% in 2008, 2.1% lower in 2009, recovering by 2010 and rising at over 9% in 2012 and 2013.

While there are questions over how accurate five-year forecasts can be, there is a general concern that new homes being built will not meet demand.

"As soon as the economic outlook improves, house prices will resume their previous upward trajectory," said the Federation's chief executive David Orr.

Price trends

However, a number of analysts have been suggesting that house prices will fall by at least 7% in 2008 since the start of the year.

People are living longer, they're delaying getting married and they're more likely to get divorced - meaning that we now have more households than ever David Orr National Housing Federation

Others have been suggesting bigger drops in prices over the year.

The Federation, which represents housing associations in England, predicts that rising demand and falling supply will push the cost of the average home in England to £274,700 in 2013.

"People are living longer, they're delaying getting married and they're more likely to get divorced - meaning that we now have more households than ever," said Mr Orr.

He said only 75% of the new homes needed were being built each year, which was also hitting the availability of affordable homes.