Property prices continue to rise

A shortage of properties going on to the market in June helped house prices rise for the third time in four months, figures show.

Nationwide said the average value of a UK home now stands at £156,442 after increasing by 0.9% during the month.

And it is the first time for a year that the annual rate at which house prices are declining has hit single digits, after dropping for the fourth month in a row to stand at 9.3%.

But the group warned that the recent improvement was unlikely to signal the 'green shoots' of a recovery, saying that while the rises seen since March were likely to be more than just "statistical noise", they were taking place amid a generally deflated market.

Despite recent rises, the number of mortgages being approved for house purchase is still 55% below its long-term average, and at a level usually associated with falling prices.

Martin Gahbauer, Nationwide's chief economist, said: "While it is encouraging to see that prices are no longer seeing steep falls, there are still many obstacles in the way of a genuine and sustainable price recovery.

"To begin with, abnormally low supply levels are unlikely to last forever, as the recent price increases should make previously hesitant sellers feel more confident about marketing their properties."

He added that more properties were also likely to come on to the market as the economic downturn took its toll on homeowners.

There has been a run of positive data on the housing market in recent weeks as potential buyers have been tempted back by record low interest rates and recent house prices falls.

But figures recently released by the Bank of England showed that the number of mortgages approved for house purchase had levelled out at around 43,000 during May.

Economists said the figure, which was below their expectations, highlighted the current fragile state of the housing market.

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