Average house price reaches record high of £222,293 in August

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House price growth picked up in August, amid signs of some buoyancy returning to the market, according to an index.

Property values increased by 1.1% month-on-month, following a 0.7% monthly increase in July, Halifax reported.

This took the average house price across the UK to a new record high of £222,293, surpassing a previous peak reached in December last year.

House prices were 2.6% higher annually, accelerating from a 2.1% annual increase recorded in July. But annual house price growth is still running at around a quarter of the 10% increase seen in March 2016.

Russell Galley, managing director, Halifax Community Bank, said: "Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low.

"However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers. House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months."

Adrian Anderson, director of mortgage broker Anderson Harris, said lenders are cutting both rates and penalties on products as they compete for business this autumn.

Meanwhile, Howard Archer, chief economic adviser at EY ITEM Club, said other recent reports showing a pick-up in mortgage approvals may ease some concerns over tepid housing market activity.

But he continued: "We retain the view that house prices are unlikely to rise by more than 2% over 2017. A small rise around 2% also looks likely in 2018.

"The fundamentals for house buyers are likely to remain weak over the coming months with consumers' purchasing power continuing to be squeezed by inflation running higher than earnings growth.

"Additionally, housing market activity is likely to be hampered by weakened consumer confidence and limited willingness to engage in major transactions."

See full story in the Leader

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