House prices jump in July
Further evidence of a housing market recovery emerged today, with Halifax claiming the average price of a home leapt by 0.9% in July.
It takes the annual rate of house price inflation to 4.6%, with house sales also rising by 6% in the first half of the year compared to the same period in 2012.
The market has been boosted because increased mortgage availability, better rates and more choice at higher loan-to-values has made buyers feel more confident.
The average house price, according to Halifax, is now £169,624, compared to £160,428 in July 2012.
Martin Ellis, housing economist at Halifax, said: "House prices are expected to continue to rise gradually through this year with only modest economic growth and still falling real earnings constraining housing demand and activity."
Mark Harris, chief executive of mortgage broker SPF Private Clients, also urged caution. "It is still too early to describe the housing market as being in rude health, however, as there is a worrying lack of stock, which is the main driver behind the latest rise in house prices," he said. "However, the number of transactions is also on the rise.
"London remains a unique case with many agents reviewing their forecasts for prime central London in particular. Overseas buyers are fuelling demand, with London increasingly seen as a safe haven for their money, and this shows no signs of abating. In other parts of the country, the picture is very different.
"This will be a long, slow recovery. Much ground has been lost and transactions and lending levels are running at a fraction of what they were at the height of the housing boom."
The Halifax figures display even more growth than the July house price announcement made by Nationwide on 2 August. Nationwide said that prices increased at their fastest rate in three years last month, rising by 0.8%. This was 3.9% higher than July 2012.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).