UK property prices continue with a steady upward trend

UK house prices increased by 0.9% in July amid signs that the economy is improving and help to buy schemes boosting sales, according to the latest index report from leading lender the Halifax.

On a quarterly basis prices are up 2.1% and this is similar to the rates of increase since the start of 2013. Indeed, prices in the three months to July were 4.6% higher than the same period in 2012.

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The data also shows that on an annual basis prices have gone up by 4.6%, the highest annual rate since August 2010. The average price for a home is now £169,624 and sales have also picked up with total purchase transactions for the first half of the year 6% higher than in the same period last year.

‘Signs of improvement in the economy, underlined by the recent evidence of a rise in gross domestic product in the second quarter and increases in employment, appear to have boosted consumer confidence,’ said Martin Ellis, Halifax’s housing economist.

‘Greater confidence is likely to have underpinned the increase in housing demand. Official schemes, such as the Funding for Lending Scheme and the Help to Buy equity loan scheme, may also be raising demand,’ he explained.

‘House prices are expected to continue to rise gradually through this year with only modest economic growth and still falling real earnings constraining housing demand and activity,’ he added.

The report also points out that the number of mortgage approvals for house purchases, a leading indicator of completed house sales, in the second quarter of 2013 was 6% higher than in the first quarter despite a 1% fall between May and June, according to Bank of England seasonally adjusted figures.

However, Ellis pointed out that supply is still low and the increase in sales over the past year has not been matched by higher supply with the stock of unsold properties on the market lower than it was a year ago.

He explained that the resulting tightening in market conditions has probably contributed to the modest upward pressure on house prices. Surveyors have, however, reported an overall increase in the number of home owners providing instructions to sell in the last few months, which could help to bring demand and supply into better balance.