House prices up 0.8%, says Halifax

The housing market showed further signs of stabilisation yesterday as the latest Halifax index revealed that property prices rose by 0.8 per cent in August. The average rise over the three months to the end of last month was 1.7 per cent, the largest uplift since July 2007 and the start of the credit crisis.

However, prices are still 10.1 per cent lower than they were last year, and the average British home costs £160,973, the mortgage lender said.

Many economists remain convinced that the subdued level of mortgage approvals and large deposits required of first-time buyers will weigh heavily on prices. They blame a shortage of supply for creating an artificial market and higher prices. Allan Monks, of JP Morgan, said: "We retain a degree of scepticism that the recent upswing in prices can be sustained."