House prices increased by 0.2 per cent in July following successive declines in May and June.
The Halifax house price index adds that the strengthening UK economy and improving buyer confidence gave the housing market more momentum than expected in the first half of 2006.
The lender has slightly increased its forecast for house price growth this year from 3 per cent to 5 per cent. This forecast is below the long-term average of 8 per cent but is in line with the reported increase in 2005.
Halifax chief economist Martin Ellis says: “This mixed pattern of monthly price rises and falls is a typical feature of a more stable housing market. Sound fundamentals will continue to support a healthy housing market over the remainder of 2006.
“Nonetheless, we expect the annual rate of house price inflation to ease, partly because the corresponding figures last year were strong. Increased pressure on householders’ finances and mounting speculation of interest rate rises are also likely to curb demand.”