Halifax sees little improvement in house prices

House prices have been softening since the middle of 2010, with many buyers deterred by a squeeze on household finances, worries about the economy and difficulty in obtaining credit. July’s rise beat forecasts for an unchanged reading on the month, and the 2.6 per cent fall in the three months to July compared with a year ago, was also better than the 2.8 per cent decline pencilled in by analysts.

However, economists said they expected house prices to resume their fall in the coming months.

“We suspect that squeezed purchasing power, tightening fiscal policy, a softening labour market and persistent serious concerns over the economic outlook will weigh down on potential buyers and dampen house prices,” said Howard Archer, economist at IHS Global Insight.

“These factors are seen outweighing the support to house prices coming from extended very low interest rates.”

Halifax housing economist Martin Ellis said that there had been little change in either the level of house sales or the number of properties on the market since 2010.

“This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales,” Ellis said.

The average price of a home stood at £163,981 last month.