House prices in the United Kingdom went up by only 0.1% in May, proving a failure of the economy to bounce back from its largest seven-month drop in April of 1.4%. In the three months through May, values have gone down overall by 1.2% in comparison with the three months before.

“House prices continue to drift modestly downwards as measured by the underlying trend”, said Martin Ellis, an economist at Halifax. “Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances”.

According to the International Monetary Fund (IMF), the UK housing market is still “soft” and is a big risk to the overall recovery of the country’s economy as a whole. In addition, the IMF said that if the Bank of England creates any increases in interest rates, then they should be done gradually, even though the bank will probably keep its key rate at the record-low 0.5% this week.

Ellis said that he expected to see a moderate economic improvement for the rest of 2011, which would help increase the demand for housing along with the bank’s low interest rates. If this happens, it should prevent another fall in prices like happened in April, and will help property values stabilize themselves later on in the year.