Halifax sees marginal house price rise in August

House and keys

House prices rose 0.8% in August, the second monthly rise in a row, according to mortgage lender Halifax.

The lender says prices in the three months to August were 1.7% higher than the previous three months - the biggest increase since July 2007 - taking the average house price to £160,973.

That said, property values still remain 10.1% lower in the three months to August compared with the same period last year.

Halifax now part of the Lloyds Banking Group says house prices are now at a very similar level as they were at the end of last year, when average house price was £160,861.

Martin Ellis, housing economist at Halifax, says: "Demand for housing has increased since the start of the year due to better affordability and low interest rates.

"This, together with low levels of property available for sale, has boosted house prices over the last few months."

But the lender warned while the housing market activity has improved, it still remains less than half the level in mid 2007.

"Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase - a leading indicator of completed house sales - increased for the sixth successive month in July, on a seasonally adjusted basis," Halifax says.

Approvals were 53% higher than in July 2008, at 50,123, but were 55% lower than in July 2007, at 112,446.

Howard Archer, chief UK and European economist at IHS Global Insight, says the recent revival in house prices is a consequence of sharply reduced mortgage interest rates and more affordable prices.

"While it is now looking very likely that April marked the trough in house prices on the Halifax measure, we suspect that they will be prone to relapses over the coming months and we very much doubt that a sharp, sustainable upward trend in house prices is in the process of developing."

The Bank of England maintained interest rates at the record low of 0.5% today and is expected to keep them at that level for the rest of this year.