Building societies report increase in house prices in July

HOUSE prices rose in July, according to Britain's two biggest building societies. Nationwide reported a big increase in July, more than reversing a fall in June, while Halifax said there was a slowdown last month, writes Diane Coyle.

The Halifax index rose 0.2 per cent in July, only half of June's modest 0.4 per cent gain. Its year- on-year growth was 1 per cent, below June's 1.5 per cent.

Meanwhile, Nationwide's index rose 1.8 per cent in July, after a 0.7 per cent fall in June. The annual rate of change more than doubled, from 1.0 per cent in June to 2.1 per cent in July.

The difference in the two closely watched sets of figures may be a result of Halifax making adjustments for seasonal peaks in house-buying. Early summer traditionally sees more house-buying.

The two indices have shown a gentle rise since last autumn. Both societies agree that average house prices, before adjustment for seasonal variation, have climbed 3- 4 per cent in 1994. Nationwide said the market was still fragile.

At the peak of the housing boom in early 1989, average prices were more than five times average earnings, according to Halifax. The ratio has fallen to 3.3.