The latest house price survey from the Halifax shows that prices rose in June by 1.2% compared to May.
Despite the month on month increase house prices are still down by 3.5% compared to this time last year. The average price is calculated using the three month period to the end of June and comparing the same periods a year ago.
According to the survey the average house now costs £163,049.
Demand & Stability
The Halifax, which is now part of the Lloyds TSB banking group, said that the low interest rates were helping to maintain the stability of prices but demand is subdued due to inflation, higher taxes and low wage rises.
Martin Ellis, housing economist at the Halifax said, “Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends.”
The Bank of England’s decision earlier this week to keep interests unchanged, the 28th consecutive month when they have not risen, has according to the Halifax, helped house price stability.
Figures from the Halifax show that in 2007 mortgage payments for a new borrower were an average of 48% of disposable earnings; in the second quarter of 2011 this figure has fallen dramatically to 28%.
Mr Ellis said, “A slowly improving economy and sustained low interest rates should help to support broad stability in the market over the coming months.” He continued “The market is, however, likely to continue to face significant headwinds which are expected to constrain housing demand.”
The most recent survey from the Halifax echoes the latest report produced by the Nationwide Building Society who said last week that the UK housing market had “moved sideways” in the past six months.
The latest Nationwide survey showed no rise in house prices over the past month, but a smaller drop of 1.1% over the past year compared to the data produced by the Halifax which showed a larger fall of 3.5%.
The third major house price survey, produced by the Land Registry, showed that house prices fell by 0.4% in May and were 2.2% down on the same time a year ago. The Land Registry survey lags behind those produced by the Halifax and Nationwide.