Halifax reports rise in house prices for July
Hope is on the horizon today for homeowners after Halifax reported a 1.1% increase in house prices in July.
This is the second increase in the last three months from the Halifax House Price Index, and the third in the first seven months of 2009.
House prices are still down 12.1% on July 2008 however, to an average £159,623 from £177,164 last year.
Martin Ellis, housing economist at Halifax, says: "So far this year, house prices have fallen by less than 1%.
"Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates.
"Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months."
Last week, the Nationwide House Price Index also reported a rise in house prices; showing a 1.3% increase in July to an average £158,871.
David Smith, senior partner at property consultancy, Carter Jonas, says: "Although increased confidence, demand and transactions are certainly playing a role in the house price rises we have seen in recent months, from both the Halifax and Nationwide, a more significant factor is supply, or the lack of it.
"There is a stark shortage of property on the market and this, above all, is driving the rebound we are seeing. The worry is that this shortage of property will cause buyers to sit on the fence again, as they will shy away from committing to a purchase at a higher price level and based on lower choice."
The Halifax index follows bleak news from the National Housing Federation on Monday that house prices will fall by 12.2% this year, and drop a further 4.6% in 2010 before recovering in 2011.
The research also suggests that homeowners who bought at the peak of the 2007 property boom could be in negative equity for a further five years. However, it predicts that the average house price in England could rise by 20% to £227,800 by 2014.
The circumstances in which a property is worth less than the outstanding mortgage debt secured on it. Although it traps householders in their properties, the Council of Mortgage Lenders (CML) says there is no causal link between negative equity and mortgage repayment problems. At the depth of the last housing market recession in 1993, the CML estimated 1.5 million UK households had negative equity but most homeowners sat tight, continued to pay their mortgages and eventually recovered their equity position.