Your house could be worth more than you think

A 1.3% rise has been recorded in July, rising for the third month in a row from £156,442 to £158,871. The three-month figure increased from 1% in June to 2.6% in July.

Martin Gahbauer, the leading building society’s chief economist, said “Even if prices were to remain unchanged for the rest of 2009, the year-on-year rate would continue to improve since prices were falling very sharply in the second half of last year.”

House prices are 6.2% lower than in July last year, though the annual rate of decline has dropped from a peak of 17.6% in February. In June it was running at 9.3%.

Although buyers have begun to come back into the market, Gahbauer said sellers were still thin on the ground and this lack of supply was pushing up prices.

This may be good news for sellers, but he warned that if prices continued to increase at the rate of the last three months they will soon be at a level noticeably out of line with earnings, rents and other fundamental determinants of housing valuations.

“Over time, however, these shortages are detrimental to housing affordability and can contribute to future instability in prices.”