House prices rose again in July for the third month running, Nationwide Building Society has revealed.

Figures published show a 1.3 per cent increase on the previous month which means the average house is now valued at £158,871.

This follows a one per cent and 1.3 per cent rise in June and May respectively.

Despite this rise in the last three months, the figures show that house prices are 6.2 per cent down on what they were this time last year.

One of the factors contributing to house prices stabilising, according to Martin Gahbauer, Nationwide’s chief economist, is that there is a shortage in the number of houses for sale as low-interest rates are allowing more homeowners to stay in their properties.

Mr Gahbauer also said: “For the first seven months of 2009 as a whole, prices have risen by a cumulative 1.3 per cent, suggesting there is now a reasonable chance that prices could end the year slightly higher than where they started.

“Only a few months ago, such an outcome would have appeared unthinkable.”

However, the Royal Institution of Chartered Surveyors warned mortgage lending would have to improve if house prices are to continue rising.

Simon Rubinsohn, RICS chief economist said: “Bank of England data on mortgage lending released yesterday (for the month of June) suggested that the availability of secured finance was only rising in a very modest way and thus not affording much help for the property market.

“Net lending increased by just over £300m last month which effectively means that lenders are pretty much just lending out their repayments.”

Mr Rubinsohn said that in 2008 the average mortgage lending per month totalled more than £3billion.

He added: “A recent RICS survey suggested that around 10 per cent of housing transactions are breaking down because of problems with obtaining finance.”

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