The Government house price index has confirmed that UK house prices are indeed falling a lot slower.

According to the Department of Communities and Local Government house prices fell just 0.1% in May, slowing the annual decline from 13.0% in April, to 12.5% in May. The quarterly index also showed a massive slowdown in the rate of decline: in the three months ending May, house prices fell just 0.4%, having fallen 4.8% in the previous three months.

All the major indices have now shown that the rate in decline of UK house prices is slowing. However no impartial analyst is saying that we are at the bottom of the market. This slowing rate of decline is based on activity rising slightly from very low levels, which is combining with the fact that supply is very low at the moment to put upward pressure on prices.

If you want to know how much activity has risen we can look at the British Bankers Association figures on mortgages for house purchase. In April house purchase loans were 29.7% lower than in April last year when they were already falling, however in May they were only 1.5% lower than in a year ago, suggesting that this may turn positive very soon.

If house purchase loans do indeed reach a bottom and start growing this will be a very positive sign for the UK housing market. That is because, though the house price rises could easily be turned around if supply increases faster than demand, that would not necessarily cause activity to decrease rapidly. Activity may well continue to rise gradually, and when the wider economy recovers the increased activity should lead to the real bottom in house prices and that start of a slow recovery in UK house prices.