Halifax has reported that house prices rose 1.1 per cent in July, and the Royal Institute of Chartered Surveyors has adjusted its outlook for the housing market to one of cautious optimism.
Previously expecting house prices to fall 10 per cent in 2009, RICS has changed its tune following an upturn in house prices over recent months, and now predicts that house prices will end the year higher than when it started.
The latest Halifax House Price Index shows an increase of 1.1 per cent from June to July, which remains 12.1 per cent lower than the same time last year, with the average property now costing £159,623.
Commenting on the results, Martin Ellis, housing economist at Halifax, said: "Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates. Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months."
Despite continued lack of availability of mortgage finance, mortgage approvals have also increased marginally with house prices in some sectors, and in conjunction with new buyer enquiries, RICS suggests that these circumstances could conspire to push approvals up to around 55,000 a month.
But it's too soon to celebrate, RICS warns, as persistent economic instability, rising unemployment, and increases in mortgage rates could still prevent a recovery in the housing market.
The housing market still faces "significant challenges" in 2010, RICS says, and the recent increase in property values does not "indicate a quick return to the boom time" because activity in the market still remains historically very weak.
Commenting on the housing market, RICS senior economist, Brigid O'Leary, said that recent changes in the housing market – "the return of buyer demand and the limited availability of housing on the market" – could support house prices and keep pushing them upwards in the short term.
"However, the outlook for 2010 is fairly uncertain and there is a real risk that prices may slip back again," she cautioned. "Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by."
Meanwhile, the latest housing market figures from the National Association of Estate Agents (NAEA) paints a different picture, recording a fall in the number of sales per agent from 10 to nine in July, and a widening gap between asking and selling prices from 1.9 per cent in June to 7.5 per cent in July.
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