Modest rise in house prices

5 August 2011

House prices have increased by 0.5% in the last quarter, according to the latest Halifax house price index.

This is the first increase for 14 months. The last increase preceding this quarter came in May 2010, when prices increased by 0.1%
Yearly figures, however, are still negative with house prices currently 2.6% lower than at this time a year ago.

Martin Ellis, housing economist for Halifax, expects house prices will continue to grow slightly over the rest of the year, but says because there is no overall annual change, it's unlikely to have a huge impact.

"This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales."

Nicholas Ayre, spokesperson for UK buying agents Home Fusion, warns people from reading too much into the latest figures.

"If ever there were a disconnect between house prices and the economy then surely this is it?"

"For house prices to have risen in July and over the three months leading up to it is incongruous given the state of the domestic and global economy."

The number of approved mortgages also increased by 4% between May and June, according to Halifax but the level of activity has been fairly static with the number of approvals consistently between 45,000-50,000 since the start of 2010.

"Until people are genuinely confident about the economy and their own financial security, the property market will remain very much on the back foot," warns Ayre.

"Unfortunately, confidence and a sense of security are in extremely short supply," he adds.


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