Both the annual rate of increase and the volume of property transactions are heading for their worst levels for a decade, said a report earlier this week.

The annual rate of house price inflation fell from 7% to 4.9% in May, the lowest in almost a decade, said Rightmove, who anticipate a 0% year-on-year rate of increase by July with little movement upwards until buyer affordability improves.

	May	April
Average Property Asking Price	£198,147	£197,539
% Change in Month	+0.3%	+1.3%
% Change in Past Year	+4.9%	+7.0%
Monthly Index (Jan 2002=100)	161.2	160.7

Since the end of the property boom there has been a gradual decrease in annual house price inflation. There have been no sharp corrections, resulting in a ‘soft landing’ on prices.

However with too few sellers and estate agents lowering prices by enough to make properties more affordable to more buyers, the result has been a ‘hard landing’ in volumes of property transactions.

These are only likely to recover if buyer affordability improves through lower prices, rising wages, or falling interest rates, said the property website.

Commercial director, Miles Shipside said: "Whilst house prices will soon be the same as a year ago, this will be of little comfort to cash strapped first time buyers or those struggling to move up the property ladder."

"Affordability should slowly improve as average wage rises outstrip house price inflation. In the longer term a return to gently rising prices will be important to encourage and help fund existing and prospective homeowners to move regularly, otherwise the stagnation of volumes is likely to continue for several years."