House prices recovered by 0.6% during July as the property market reversed the entire slump seen in the previous month, according to the latest Halifax house price index.

The mortgage lender says the mixed pattern of monthly rises and falls in the year to date is consistent with a slowing market. It expects house prices will be broadly unchanged across 2010 (see the Free House Price Valuation guide).

The average house price is now 167,425, which is 16% below the peak seen in August 2007.

The Halifax figures contrast with fellow lender Nationwide which reported a 0.5% drop in July (see the Nationwide fall MSE News story).

Halifax says the increase in the number of properties for sale over the past few months, boosted by the recent abolition of Home Information Packs (Hips), has relieved much of the pressure which was driving up prices in 2009.

June's fall of 0.6%, which followed price declines in April and May, came amid uncertainty over the impact of Chancellor George Osborne's emergency Budget.

Halifax housing economist Martin Ellis says: "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 house prices will be broadly unchanged over 2010.

"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."

Further reading/Key links

Valuation loophole: Free House Price Valuation
Cut home loan debt: Cheap Mortgage Finding
Latest house prices: Nationwide, Land Registry, Halifax