House prices rose by 0.9% in June, according to figures published today from the Nationwide Building Society, fuelling hopes the property market is beginning to stabilise.

This represents the third rise in the past four months, shrinking the annual rate of decline from 11.3% in May to just 9.3% in June. The average house rose to £156,442 in June, compared with £154,016 in the previous month.

The Nationwide described the figures as a “welcome surprise”.

However, while small “green shoots” of stability are beginning to emerge, the UK housing market is still very fragile. Yesterday the Bank of England announced that there had been a small rise in mortgage approvals, from 42,191 in April to 43,414 in May. Analysts had expected a figure closer to 46,000.

The Bank also said that mortgage lending rose by just £324 million, a third of the level in April and a tenth of the amount loaned at the same time a year ago.

Although average house prices are down 9.3% compared with this time last year, this is the first time since July 2008 that the year-on-year fall had been in single digits.

Martin Gahbauer, Nationwide’s chief economist, said: “House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise.

“What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards.”

The Nationwide said that the most accurate measure of short-term trends was to compare the average house price over the last three months with that of the previous three.

According to this measure, house prices are up 0.9%, the first time the market has seen an upward trend since December 2007.

The building society said that if this trend continued then this year would end with prices down by only “small single digits”.

“This would represent a stark shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large declines seen in 2008,” it said.

This entry was posted on Tuesday, June 30th, 2009 at 9:49 am and is filed under Housing Market, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.