Retirement property is bucking the national trend, with sales climbing 3.8% during May, according to Retirement Homesearch.

According to new reports, the retirement market has seen average prices rise by 3.7% in the same period when the housing market is recording a significant decline in recent months, with both Nationwide and Halifax reporting price falls of 2.4% in May.

Figures released by the Retirement Homesearch  show that the price of the average retirement property was £139,597, compared with £134,442 in April.  Since May 2007, prices have risen by 5.3% from £132,614.

David Gabriel, property sales manager at Retirement Homesearch, comments: “May was one of the best months we’ve experienced for almost a year in terms of the average price of properties sold, with demand for higher-end retirement property looking particularly healthy.”

Recent data from the Bank of England show that the number of loans approved for home buying has dropped to just over half the 107,000 seen 12 months earlier. But the Bank data also indicated that there was an improvement on loans approved for people remortgaging their property by 8,000 to 106,000 in April.

According to the bank, those trying to get their foot on the property ladder without equity built up in an existing home, however, need bigger deposits and face more expensive deals. The overall value of mortgages approved over the month was £23.8 billion - below the average £26.1 billion lent in the previous six months.

Howard Archer, chief UK and European economist at Global Insight, said the housing market was under pressure from a “toxic combination” of stretched affordability and tight lending conditions.

He said: “Elevated affordability pressures on potential house buyers stem from high house prices and modest real disposable income growth, while still tight credit conditions are leading to significantly fewer and more expensive mortgages being available.”

However, Gabriel says there is growing demand for retirement property as the number of people whose children have become independent grows, causing many to consider downsizing.

He says demand is particularly high for properties that are easily maintained and safe, giving peace of mind to pensions who wish to travel in their retirement. But the worse-than-expected figures prompted predictions that the housing market will “fall sharply” over the next two years.

Records also show that mortgage approvals fell to 58,000 from 63,000 in March - 7,000 less than the 65,000 predicted by analysts. The overall value of mortgages approved over the month was £23.8bn - below the average £26.1bn lent in the previous six months.