Prices up in July

As increase of 0.6% was reported today for house prices in July as the property market reversed on the previous month.

This was tempered by news from The Halifax that said that this pattern of mixed monthly rises and falls in the year to date was consistent with a slowing market.

It expects that house prices will be broadly unchanged across 2010 and said low interest rates and a recovering economy were helping to underpin demand.

The average house price is now £167,425, which is 16% below the peak seen in August 2007.

The fall seen in June of 0.6%, followed the declines in the previous two months, due to the came uncertainty over the emergency Budget.

The Chief UK economist at IHS Global Insight, Howard Archer, had some cautionary words though.  He said the rise in July had not altered his views that house prices will reduce for the rest of 2010 and soften again in 2011.

He added: "On balance, while we believe that a sharp correction in house prices is unlikely, we do expect them to ease back by around 3% over the second half of 2010.

"Furthermore, it is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in, which will hit people's pockets and lead to serious job losses in the public sector.

"Consequently, a further drop of around 5% in house prices looks highly possible in 2011, although much will depend on mortgage availability and the amount of houses coming on to the market."

Halifax housing economist Martin Ellis said: "The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market.

"It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.

"The increase in the number of properties for sale over the past few months, boosted by the recent abolition of HIPs, has relieved much of the pressure that was driving up prices in 2009.

"Low interest rates and a recovering economy, however, are underpinning demand and continue to support the market."