House prices increased by 1.1 per cent in July, according to the new Halifax House Price Index.
This is the second increase in the last three months and the third so far in 2009.
However, prices have fallen 0.8 per cent over the first seven months of the year. In July, the average house price was £159,623, compared to £160,861 in December 2008. In addition, house prices in July were 12.1 per cent lower on an annual basis.
Martin Ellis, housing economist, said: "Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates. Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months."
Commenting on the Halifax House Price Index, Brigid O'Leary, senior economist for the Royal Institution of Chartered Surveyors (RICS), said:
"Given that there's been a range of positive news about the housing market lately, the increase in the Halifax house price index in July is hardly surprising. And with buyer interest still relatively strong and low levels of property coming on to the market, it seems more likely than not that prices may edge up further in the next few months."
She added: "But that doesn't change the fact that the housing market, in terms of transactions, is still in a fairly depressed state. Economic uncertainty, rising unemployment and continuing restrictions on mortgage finance could all pose significant headwinds to a longer term recovery in both activity and prices."