The latest view of the housing market comes from Halifax, which said the July rise was below the 6.3% increase in June and compares with a recent high of 6.9% in May.
Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase in the three months to June were modestly (2%) higher than in the previous quarter, on a seasonally adjusted basis.
But activity remains significantly lower than a few years ago with approvals 56% lower in 2010 Q2 compared with 2007 Q2.
Prices in July were marginally (0.8%) lower than at the end of 2009 but are 8.3% above their April 2009 trough.
Low mortgage rates continue to reduce the burden of servicing mortgage debt, said the bank. And nationally, it said, typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in 2007 Q3 to 30% in 2010 Q2.
Affordability
Halifax added that this key measure of affordability is at a more favourable level than the long-term average over the past 25 years (37%) and is a key factor supporting housing demand.
In separate research to be released later this week, Halifax has found that the total value of privately owned housing stock in the UK more than doubled over the past decade. There was a 118% increase from £1,719 billion in 1999 to an estimated £3,755 billion in 2009. During the same period, the retail price index rose by 29%.
However, since 2007 the value of housing stock in the UK has declined by 8%. This reflects the reduction in house prices between mid 2007 and early 2009. The improvement in house prices in 2009 saw housing value grow by an estimated 2% during the year.
Martin Ellis, housing economist at Halifax, said: "House prices increased by 0.6% in July, reversing the fall in June. Overall, there has been little change in prices during 2010 so far.
“The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market. It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.
The increase in the number of properties for sale over the past few months, boosted by the recent abolition of HIPs, has relieved much of the pressure that was driving up prices in 2009. Low interest rates and a recovering economy, however, are underpinning demand and continue to support the market."
However, Capital Economics had a less sanguine view of future house prices, predicting a downward trend.
“House prices rose in July, reversing some of the recent falls. But this does not alter our view that prices are set for a period of considerable weakness in the remainder of this year and into 2011,” it said.
Russell Quirk, founder of online estate agency, emoov.co.uk, said predicting the future trends in house prices was a “case of the blind leading the blind”.
He added: “According to the Nationwide, prices fell by 0.5% in July, while according to the Halifax they rose by 0.6%. The indices are divided, as are the experts.
"It's tough to call the future direction of home values but there is a greater supply of stock and mortgages are still proving difficult to arrange for many so the trend is probably set to be a downward slope rather than an upward one."
But David Smith, senior partner at property consultancy, Carter Jonas, said he believed the inconsistency between indices indicated a two tier market.
He said: “Increased supply is certainly placing downward pressure on prices at the lower end of the market but at the mid to high end prices remain buoyant.We are seeing the formation of a two-tier market.
"Money remains very cheap if you can secure it, especially if you are borrowing at low LTVs, and this is acting as a glass floor on prices, particularly at the higher end. At the top end of the market demand is still very strong and if anything prices are still rising.
"At the lower end of the market, concerns over the economy and difficulties securing mortgage finance are far more material.
"Recent price volatility is not the beginning of a sharp decline but rather a reaction to the price rises of the past year, constrained mortgage finance, increased supply and a still uncertain economy."
