House prices and mortgage approvals on the increase

10 September 2009 / by Andy Davies

House prices increased by 0.8 per cent in August the latest Halifax house price index has revealed, meaning that the average house is now priced at £160,937.

This follows a 1.2 per cent increase in July, which now means house prices as whole remain at a similar level to what they were at the end of last year.

Explaining the increase in prices, Martin Ellis, housing economist, said: "Demand for housing has increased since the start of the year due to better affordability and low interest rates. This, together with low levels of property available for sale, has boosted house prices over the last few months."

However, despite these successive increases, house prices remain 10 per cent down on what they were this time last year, when the average house cost £174,241.

Housing market activity has continued to improve according to figures published by the Bank of England, which show that mortgage approvals were 53 per cent higher in July this year than they were in July 2008, as more than 50,000 mortgage applications were approved.

Keshav Thukaram, managing director of buy-to-let products and services at Smartlandlord.co.uk, believes this is only a short-term recovery and warned "the economy isn't out of the woods yet".

"We are in the middle of a recession not a sustained recovery. This is a false dawn in a mini-bubble," he said.

Before adding, "The UK's 2.6m landlords still need to be cautious. They need to watch out for tenants being made redundant and not paying the rent; they should invest in rent guarantee insurance. Savvy first-time buyers should continue to bide their time before piling into property."

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