House prices rose in August, Halifax says

Average house prices rose by 0.8% in August, according to the Halifax house price index.

This is the second successive month that house prices have risen, bringing the average price to £160,973.

House prices are still 10.1% lower than 12 months ago, however, and have shown little change over the first 12 months of the year, according to the Halifax index.

A key factor contributing to higher house prices is that the proportion of disposable earnings devoted to mortgage payments is falling.  This makes houses more affordable.

Borrowers were forking out 48% of average disposable income on their mortgages in August 2007, however that figure fell to 29% in August 2009.

Whilst housing market activity continues to improve, there are those who are still feeling uncertain about the strength of the market in the near future.

For example, Keshav Thukaram, managing director of buy-to-let products and services web site Smartlandlord.co.uk, has made these comments:

“Property prices are definitely recovering but only in the short-term – the economy isn’t out of the woods yet.  The increase in house prices is being driven by the extra liquidity generated by quantitative easing.”

“We are in the middle of a recession not a sustained recovery.  This is a false dawn in a mini-bubble. ”

Mr Thukaram also advises “..Savvy first-time buyers should continue to bide their time before piling into property.”