UK house prices rise in August, outlook soft, says Halifax

British house prices rose for the second month running in August, mortgage lender Halifax said on Wednesday, confounding expectations for a fall though it still expected house prices to stagnate overall this year.
House prices rose 0.2% in August, Halifax said, which, coming after a 0.7% rise in July, had helped to reverse declines recorded between April and June.
That left prices 4.6% up in the three months to August compared with a year ago and took the average price of a home to 167,953 pounds – 9% above its low in April 2009 but still 16% down from a peak in August 2007.
Analysts had expected a fall of 0.5% on the month, for a three-month annual rate of 4.4% after rival mortgage lender Nationwide reported a 0.9% drop in house prices in August. Halifax economist Martin Ellis said that August's rise still only left prices at a similar level to where they were at the end of 2009, and he expected house prices to remain static in 2010 as a whole.
Housing market activity has been muted in recent months, with approvals hovering at less than half the level they reached at the peak of the housing market in 2007, while the latest official data showed mortgage lending hit a 4-month low in July.
Most economists reckon house prices will stagnate this year and many see a risk of price falls next year once the government's deep spending cuts kick in, which could constrain demand from homebuyers.
"The very modest rise reported by the Halifax in August does not fundamentally alter our view that house prices will ease back over the final months of 2010 and very likely soften modestly further in 2011," said Howard Archer, economist at IHS Global Insight.
"The overall impression coming from the data and survey evidence is that housing market activity is muted and prices are soft."