House prices rise in first half of 2011

Model house with coins

Average house prices have risen by 1.8% in the first six months of the year, according to Assetz.

Assetz House Price Watch, which collates data from the five leading house price indices - Acadametrics, Nationwide, Halifax, CLG and Rightmove - shows the average UK house price has risen consistently in 2011.

The average house price stood at £198,908 in June, up 1.8% from an average of £195,425 in January.

On an annual basis though, prices are down 1.2%.

According to Assetz, the rise shows "increasing market stability".

Stuart Law, chief executive of Assetz, comments that the upward trajectory of house prices comes in spite of faltering GDP growth.

"Looking at all the house price data together, it is clear that the overall trend is one of positive growth in the last six months, with pent-up demand from people who need to move and the rapidly growing appetite of buy-to-let investors supporting price growth."

Law adds that the improving availability and competitive mortgage interest rates is also helping the housing market "reverse the finance famine".

However, he says that these "improving market conditions" could be in jeopardy if the Bank of England continues to keep interest rates low.

"It was too slow to reduce rates as we entered the recession, which led to a series of rapid rate reductions in an attempt to stimulate the economy. Its failure to raise rates now could result in a series of panicked rises in 2012 or 2013 to combat inflation, which would have a serious impact on consumer affordability and confidence," he says.

This article first appeared on our sister website, Money Observer.