House prices rise in July but outlook muted

Published 05th Aug 2011

House prices rose 0.3 percent last month, but the housing market is unlikely to see much further improvement in the rest of this year, mortgage lender Halifax said on Friday.

House prices have been softening since the middle of 2010, with many buyers deterred by a squeeze on household finances, worries about the economy and difficulty in obtaining credit.

July's rise beat forecasts for an unchanged reading on the month, and the 2.6 percent fall in the three months to July compared with a year ago, was also better than the 2.8 percent decline pencilled in by analysts.

However, economists said they expected house prices to resume their fall in the coming months.

"We suspect that squeezed purchasing power, tightening fiscal policy, a softening labour market and persistent serious concerns over the economic outlook will weigh down on potential buyers and dampen house prices," said Howard Archer, economist at IHS Global Insight.

"These factors are seen outweighing the support to house prices coming from extended very low interest rates."

Halifax housing economist Martin Ellis said that there had been little change in either the level of house sales or the number of properties on the market since 2010.

"This pattern is expected to continue over the rest of the year with little genuine direction in either house prices or sales," Ellis said.

Source: ' Reuters '

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