Further signs of a stabilising housing market emerged today when Britain's biggest lender said house prices were unchanged last month and had failed to move since January.

The Halifax said that the yearly rate of house price inflation fell to 7.8%, from March's 9.7%, leaving it at its lowest level since June 2001.

The lender said it expected earnings to continue rising faster than house prices, making it easier for first-time buyers to get a foot on the housing ladder.

The average house price stood at £163,615 last month, the Halifax said, showing no change. This followed a rise of 0.5% in March, levelling out February's drop of 0.5%.

"The latest indicators provide further evidence that activity levels are stabilising following a sharp downturn in the second half of last year," said Halifax chief economist, Martin Ellis. "We appear to be entering a period of broad stability, particularly in terms of market activity.

"Sound fundamentals, particularly in the shape of the ongoing strength of the labour market and the low level of interest rates, should continue to underpin the market."

Halifax calculated that the total value of household wealth in the UK increased by 12% to £5.51bn in 2004 due to a combination of house price increases and the continuing recovery in share prices.

Over the last five years, the value of households' net equity - the total value of properties minus outstanding mortgage payments - almost doubled to £2.43bn by the end of 2004.

While the Halifax reported a flat housing market, the Nationwide last week reported a monthly increase of 0.9%, although Nationwide also said that annual inflation fell 0.9%.

Howard Archer, chief UK economist at Global Insight said that, as both lenders' indices had been volatile recently, it was more relevant to look at the underlying trend, which indicates that overall the market remains soft.

Mr Archer said that although the latest evidence showed signs of a stabilisation, and some modest improvement in the market, this was at a relatively low level, and was partly due to seasonal factors.

"Thus, it is still very much a buyers' market. Nevertheless, very few vendors are currently having to sell because of distressed reasons, and consequently are more prepared to leave their house on the market rather than accept a lower price.

"Therefore, there seems little likelihood in the near term of a significant move back up in house prices, or in a sharp correction occurring."