House prices rose for the second month in a row, according to the Halifax House Price Index.
The latest index reveals prices increased by 0.8% in August compared to July but property values are 10.1% lower in the three months to August compared with the same period a year ago. The average UK home is now valued at £160,973.
Prices in the three months to August compared with the previous three months were 1.7% higher, which was the biggest rise in this measure since July 2007.
Halifax housing economist Martin Ellis, says: "Demand for housing has increased since the start of the year due to better affordability and low interest rates."
Ellis adds affordability of mortgages improved for new borrowers. Typical mortgage payments for a new borrower had fallen, from a peak of 48% of average disposable earnings in September 2007 to 29% in August 2009.
Howard Archer, economist at IHS Global Insight, says: "While it is now looking very likely that April marked the trough in house prices on the Halifax measure, we suspect that they will be prone to relapses over the coming months and we very much doubt that a sharp, sustainable upward trend in house prices is in the process of developing."
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