House Prices Rise Slightly in July

House prices increased by 0.6% in July, the Halifax House Price Index shows, which reverses the fall reported in June.

Although house prices did increase slightly in July, the mixed pattern of monthly rises and falls throughout the year so far does point to a slowing market and indicates that property market will remain broadly unchanged throughout 2010.

With low interest rates and an improving economy underpinning demand, it is the aboloition of HIPs and the surge in the numbers of properties being put up for sale that is restraining house price inflation.

Mortgages have become more affordable as the typical payments for a new borrower have fallen from a peak of 48% of average disposable earnings in 2007 Quarter 3 to 30% in 2010 Quarter 2.

This key measure of affordability is at a more favourable level than the long-term average over the past 25 years (37%) and is a key factor supporting housing demand.