Halifax index shows UK residential property prices rose in August

 
Prices increased 0.2% last month and are 4.6% up in three months to the end of August compared with a year ago. On top of a 0.7% rise in July the declines of April and June have been reversed, the Halifax said.
 
The average house price is now £167,953, some 9% above the lows of April 2009 but still 16% down from the peak of the market in August 2007.
  Analysts have been predicting prices falls for the second half of 2010 and indeed the Nationwide index for August showed a decline of 0.9%. Halifax economist Martin Ellis said that August’s rise still only left prices at a similar level to where they were at the end of 2009, and he expected house prices to remain static in 2010 as a whole.
 
‘The overall impression coming from the data and survey evidence is that housing market activity is muted and prices are soft. The very modest rise reported by the Halifax in August does not fundamentally alter our view that house prices will ease back over the final months of 2010 and very likely soften modestly further in 2011,’ said Howard Archer, economist at IHS Global Insight.
 
Mark Pilling, managing director of agents Spicerhaart corporate sales said that the latest rise from Halifax should not be taken out of context. ‘The supply and demand factors affecting house prices are now more complex than ever and differ for each localised market. It is likely we will see fluctuating values over the next year or so with different regions faring better than others,’ he explained.
 
‘Lenders and surveyors should take more notice of what is going on in the local area rather than put too much weight to the overall UK picture presented by these indices,’ he added.
 
Although the UK market is slowing the longer term trend is broadly positive as the sector is in a strong year on year position, according to the latest report from the National Association of Estate Agents (NAEA)
 
It shows that the number of people registering with agents fell on average from 292 in July to 250 in August. The number of sales made by the average branch also dipped slightly, from eight in July to seven in August. The percentage of sales made to first time buyers dropped from 26% to 21% from July to August.
 
Over the longer term however the market remained in a similar position to 12 months previously. A particular positive was the fact that the supply of housing appears to have recovered. The average agent had 69 properties on its books, up very slightly from 68 the month before.
 
‘Year on year, it does not appear that there has been a drop off in activity. However the next couple of months will be telling. The market appears relatively flat at the moment which we expect during the holiday month of August. We would expect some indication during September and October as to which way it is likely to go, before we get the traditional pre-Christmas slowdown,’ said Michael Jones, president of the NAEA.
 
He explained that among the expected fall off in activity that always typifies the high summer, the figures on supply of housing are a welcome piece of news. ‘Supply of housing has been low in the first half of this year and it is welcome to see it return to a similar level to 12 months ago,’ he said.
 
But the market needs a boost and this has to come in terms of more lending, he warned. ‘What we need now is for the lenders to increase mortgage availability particularly to first time buyers. There remains a strong underlying confidence in property, which is still considered by many to be the best longer term investment,’ Jones added.