Housing market recovery ‘slow yet steady’

House prices edged ahead by 0.2% during August as activity in the property market remained subdued but constant, figures show.

The latest increase follows one of 0.7% in July and reverses most of the falls seen during late spring and early summer, leaving house prices at a similar level to the end of last year.

According to the Halifax, activity in the market had been "largely static" since the start of 2010, enabling house price inflation to cool, after a shortage of supply momentary pushed prices up during 2009.

House prices are expected to finish 2010 at roughly the same level seen in January but figures indicate a market starting to show shoots of recovery, albeit months later than originally predicted.

However, the figures are in stark contrast with those released by competitor Nationwide last week, showing that house prices fell by 0.9% during August, following a drop of 0.5% in July.

Data from the Bank of England also showed that only 48,722 mortgages were approved for house purchases during July, a level that economists consider to be consistent with house price falls.

Such gloomy figures have stirred up further shouts of a 'double-dip' in housing, with one economist warning that prices could fall by as much as 25% between the start of this year and the end of 2012.

But others said the recent dip in house prices was not unhealthy as the recovery in the property market is now ahead of improvements in the wider economy.

"The market is broadly stable, with house price inflation having cooled since last year when supply shortages helped to push up prices," said Martin Ellis, Halifax Housing Economist.

"The improved economy, strengthening labour market and low interest rates are all supporting housing demand. We expect that UK house prices will remain static overall in 2010."