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Hopes of recovery mount, as house prices increase

Hopes of recovery mount, as house prices increase

Category: Mortgages

Updated: 05/08/2009
First Published: 05/08/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Hopes of a property market revival have been boosted once more, with newly published figures showing that the average price for homes in the UK increased by over one per cent in July.

The 1.1 per cent rise is the second improvement in property values in the last three months, according to the Halifax's house price index.

Prices in the three months to July, which are considered an indicator of long term trends, grew by 0.8 per cent compared to the previous three months – the first quarterly improvement since October 2007.

The average price of a home in the UK is now £159,623, which represents a contraction of 12.1 per cent over the last 12 months.

However, the market has clearly stabilised in 2009 thus far, with a fall of just 0.8 per cent since December 2008, when the average price for property was £160,861.

The house prices to earnings ratio – considered a key affordability measure – has also eased, falling from a high of 5.84 to an estimated 4.36 last month, with the long term average of 4.0.

"Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates," said Martin Ellis, Halifax's housing economist.

"Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months."

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