House prices fell by 1.9 per cent in March compared to a steeper decline in the previous month in the latest sign that the turbulence in the housing market may have begun to stabilise.

Over the first three months of the year, the Halifax house price index showed a drop of 2.7 per cent - a noticeably smaller decrease than the falls recorded of between 5 per cent to 6 per cent in each of the previous three quarters.

Today's figures gave some hope that the UK housing market may be stabilising, after Nationwide revealed yesterday that house prices rose by 0.9 per cent in March, the first monthly increase in 16 months, while the Bank of England showed the number mortgage approvals jumped by 19 per cent during February.

House prices have fallen steadily since 2007 as the availability of mortgage finance declined after the financial crisis stopped banks from lending to businesses and consumers.

House prices have fallen by 17.5 per cent since March 2008, according to Halifax.

The ratio of average house price to earnings is now at 4.34, its lowest level since 2003, which may indicate that the housing market is returning to normality.

Homeowners with tracker mortgages have been helped out in recent months by several large cuts in interest rates. The Bank’s base rate is now 0.5 per cent, down from 5.25 per cent at the same time last year.

Martin Ellis, housing economist at Halifax, said: “Conditions in the housing market are likely to remain tough during the remainder of 2009 despite improvements in affordability.”

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