House prices stabilise

Further signs of a steadying in the UK house market have emerged (DAN KITWOOD / GETTY IMAGES)

Further signs of a steadying in the UK house market have emerged after figures from the Halifax showed prices rose by 0.3% in July.

The bank added that prices were up on a quarter-to-quarter basis for the first time in 14 months, following a 0.5% rise in the three months to July.

With little change in either the level of house sales or the number of properties on the market since late 2010, Halifax said the steady market conditions have helped to stabilise house prices.

Halifax housing economist Martin Ellis said: "This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales."

The average UK house price in July was marginally higher than in December on a seasonally adjusted basis at £163,981. However the figure is still 2.6% lower than a year earlier, based on the average for the three months to July.

Despite today's improvement, IHS Global Insight chief economist Howard Archer said he continued to believe that house prices will fall by around 5% from current levels by mid-2012.

He said he feared squeezed purchasing power, spending cuts, a softening labour market and concerns over the economic outlook will weigh down on potential buyers and dampen house prices.

"These factors are seen outweighing the support to house prices coming from extended very low interest rates," he added.

Halifax noted that the number of mortgages approved to finance house purchases increased by 4% between May and June to 48,421 - the highest monthly total since May 2010.

However, the bank said this figure was still within the range of 45,000 to 50,000 per month seen since the beginning of 2010.

PA