The property data firm's monthly survey showed prices were 3.3% down in April compared with a year ago, the biggest decline since October 2009, when Britain was emerging from recession.
Stronger demand left prices unchanged on the month, ending a nine month run of falls. However, Hometrack said the pick up in demand was likely to fade during the rest of the year as public spending cuts, tax rises and waning consumer confidence take their toll.
‘The supply of housing continues to grow on the back of improved levels of market activity. Listings were up 5.2% in March, greater than the growth in demand over the month,’ said Richard Donnell, Hometrack research director.
‘Continued expansion on new supply over the coming months could put pricing under further pressure. The second half of 2011 is likely to emerge as a new phase where rising supply will constrain any further improvement in pricing levels,’ he explained.
‘Weaker consumer confidence could result in a slowdown in demand which would exacerbate the pressure on prices,’ he added.
The proportion of the asking price that sellers received in April fell to 92.6% from 92.7% in what could be an early sign of buyers' increasing power, he explained.
The report also shows that the number of new properties listed for sale rose in April by 5.5%, compared with 5.2% in the previous month. While new buyers registered with estate agents rose by 2.8% in April, down from March's 4.2% increase.
London continued to buck the national trend, with a 0.3% month on month price rise in April. Prices fell in every other region, led by the northeast which was down 0.4%.
The British Bankers' Association said last week that UK mortgage approvals fell by 10% in March compared with a year earlier.
