House prices increase for second month in row

House prices rose for the second month in a row in August — fuelling hopes of a rebound in the property market.

A lack of supply and a greater demand for homes was behind the rise of 0.8 per cent, said Halifax.

The average cost of a property in the UK rose to £160,973, broadly in line with where prices were at the end of last year.

Prices were still down 10.1 per cent in the three months to August versus a year ago, but the year-on-year drop was the lowest figure since July 2008.

Halifax said house prices have now risen in four of the past eight months as the market continues to show signs of stabilising.

Martin Ellis, Halifax housing economist, said: "Demand for housing has increased since January due to better affordability and low interest rates.

"This, together with low levels of available property, has boosted prices over the last few months."

Howard Archer, chief UK economist at IHS Global Insight, added: "The recent revival is due to sharply reduced mortgage interest rates and more affordable prices due to the substantial fall in house prices from their 2007 peak."

But some economists warn prices could fall again as more people put their homes up for sale and more houses are repossessed.