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Property prices and sales in UK hold steady

It is the first increase in this measure of the underlying trend since May 2010 when prices were up 0.1%. It means that the UK house price in July was marginally higher, 0.7%, than in December 2010 on a seasonally adjusted basis, at £163,981.
On an annual basis prices are still lower but the gap is reducing. Prices in July were 2.6% lower as measured by the average for the three months to July against the same period a year earlier. This was the second successive improvement in the annual rate from a low of -4.2% in May.

But overall there is little change in housing activity trend. The number of mortgages approved to finance house purchase, a leading indicator of completed house sales, increased by 4% between May and June to 48,421, the highest monthly total since May 2010.

But despite this encouraging rise, the industry wide number of approvals remains within the range of 45,000 to 50,000 per month where it has been since the beginning of 2010. Approvals in the second quarter were unchanged from the previous quarter on a seasonally adjusted basis.

However, the Halifax believes that steady market conditions are helping to stabilise house prices and sales. Market conditions, as measured by the ratio of house sales to the stock of unsold properties on surveyors' books, have been largely unchanged over the past eight months. This is an improvement on much of 2010 when weakening conditions, led by falling demand, accompanied a gentle decline in house prices.

There has been little change in either the stock of unsold properties or the number of sales since November 2010. The current stock of unsold properties is in line with the average over the past decade.

‘Prices rose for the third consecutive month, increasing by 0.3% in July. Overall, there has been little change in either the level of house sales or the number of properties on the market for sale since late 2010 but these steady market conditions have helped to stabilise house prices in 2011 following last year's modest decline,’ said Martin Ellis, Halifax housing economist.

‘This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales. Sustained low interest rates and a slowly improving economy should help to support demand in the face of pressures from weak earnings growth, relatively high inflation and higher taxes,’ he added.