House prices in the three months from May to July were 0.5% higher than in the preceding three months. This is the first increase in this measure of the underlying trend since May 2010 (0.1%).
The average UK house price in July was marginally higher (0.7%) than in December 2010 on a seasonally adjusted basis, at £163,981. On an annual basis, prices in July were 2.6% lower as measured by the average for the three months to July against the same period a year earlier. This was the second successive improvement in the annual rate from a low of -4.2% in May.
Little change in housing activity trend. The number of mortgages approved to finance house purchase - a leading indicator of completed house sales - increased by 4% between May and June to 48,421; the highest monthly total since May 2010.
Despite this encouraging rise, the industry-wide number of approvals remains within the range of 45,000-50,000 per month where it has been since the beginning of 2010. Approvals in the second quarter were unchanged from the previous quarter on a seasonally adjusted basis.
Steady market conditions help to stabilise house prices and sales. Market conditions - as measured by the ratio of house sales to the stock of unsold properties on surveyors' books (according to RICS) - have been largely unchanged over the past eight months.
This is an improvement on much of 2010 when weakening conditions, led by falling demand, accompanied a gentle decline in house prices.
There has been little change in either the stock of unsold properties or the number of sales since November 2010. The current stock of unsold properties is in line with the average over the past decade.
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to July were 0.5% higher than in the previous three months. This was the first increase in this key measure of underlying price movements for 14 months. Prices rose for the third consecutive month, increasing by 0.3% in July.
"Overall, there has been little change in either the level of house sales or the number of properties on the market for sale since late 2010. These steady market conditions have helped to stabilise house prices in 2011 following last year's modest decline.
"This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales. Sustained low interest rates and a slowly improving economy should help to support demand in the face of pressures from weak earnings growth, relatively high inflation and higher taxes."
Nicholas Ayre of UK buying agents, Home Fusion, said:
"If ever there were a disconnect between house prices and the economy then surely this is it?
"For house prices to have risen in July and over the three months leading up to it is incongruous given the state of the domestic and global economy.
"The Halifax is optimistic when it says low rates and a slowly improving economy will support demand. We are on the verge of global meltdown and so the ongoing growth of the UK economy is open to question.
"The overall stagnation in prices we have seen over the past year or so may soon come to an end as global forces cause the market to unravel.
"Even London, which has defied market conditions over the past year, could come under severe pressure given the nature of the crisis unfolding.
"To date the capital has thrived on the back of strong demand from international buyers and its relatively strong local economy but the way things are going, who knows?
"Until people are genuinely confident about the economy and their own financial security, the property market will remain very much on the back foot. Unfortunately, confidence and a sense of security are in extremely short supply.
"There has been much talk about the UK's property market ambling along with very little direction but this could rapidly come to an end as the global economy goes pop.
"One major issue with any house price analysis right now is that the data doesn't really reflect what's happening on the ground because there is very little activity and very few sales taking place."
