House prices rose for the third consecutive month in July, according to the results of the latest Nationwide House Price Index.
The lender’s figures show the average price of a property rose by 1.3% over the month from £156,442 to £158,871, while the three-month figure increased from 1% in June to 2.6% in July.
Martin Gahbauer, chief economist at the building society, said that although house prices were still 6.2% lower than 12 months ago, the increase represented another sharp improvement from the 9.3% year-on-year decline in June.
He explained: “Even if prices were to remain unchanged for the rest of 2009, the year-on-year rate would continue to improve since prices were falling very sharply in the second half of last year. “For the first seven months of 2009 as a whole, prices have risen by a cumulative 1.3%, 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.” Brian Murphy, head of funding at Mortgage Advice Bureau, said that despite the fact new mortgage sales were still at low levels, the market was seeing more encouraging signs in terms of purchase activity.
“Since the start of the year, there has been a steady increase, month-on-month, in mortgage purchase sales, albeit from a very low base. This is a reflection of the current low interest rate environment and renewed buyer confidence.”