House prices rise for third month in a row

6 October 2009

The Halifax house price index for September puts the average house price at £163,533, an increase of just over £9,000 from April's low and marking a return to the average house price recorded in mid-2005.

House prices increased by 2.8% in Q3, the first quarterly rise for two year.

But the rises have not yet filtered through to positive annual figures with September house prices 7.4% lower compared to the same time last year.

House prices have been pushed up by a combination of increased demand and a low number of properties for sale, Halifax says.

Mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in Q3 2007 to 30% currently.

Martin Ellis, housing economist at Halifax, says: "The marked improvement in affordability due to the reduction in both property prices and interest rates since mid2007 has been a key factor in stimulating higher demand."

He says that rising unemployment and low earnings growth are likely to curb the increase in demand.

But he adds: "There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale.

"This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth evident in recent months."