UK house prices fell by a further 1.7% in April, slightly less than the 1.9% fall in March, but still down 17.7% lower on an annual basis, the Halifax has reported.

The continued fall in prices means the UK average house price has returned to where it was five years’ ago in April 2004 (£154,511). Additionally, the house price to earnings ratio – a key affordability measure – is at its lowest for more than six years. The house price to average earnings ratio has declined by 27% from a peak of 5.84 in July 2007 to an estimated 4.26 in April 2009. The ratio is at its lowest level since September 2002 (4.14). The long-term average is 4.0.

Halifax also reported that prices in the three months to April compared to the previous three months – an indicator of the underlying trend – were 3.3% lower. This is slightly below the quarterly rate of decline of 5-6% recorded consistently between June 2008 and January 2009.

Commenting, Martin Ellis, housing economist, said: “The average UK house price declined by 1.7% in April, slightly less than the 1.9% monthly fall in the previous month.

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.”