The latest house price index figures from the Halifax show that the average price of a house increased in June 2011 by 1.2%.

Although up on the month the average price of £163,049 was still 0.5% down on the previous quarter and a full 3.5% down on last year.

The Halifax points to stable (if historically low) mortgage approvals, low interest rates, a slowly improving economy as well as improved employment numbers as reasons for this mild improvement.

On the reverse side of the coin however high inflation, higher taxes and low earnings growth would continue to be the dampeners the report said.

Nit one uptick does not indicate the whole truth as we all know. The graph below puts this in context, where Nationwide, Halifax, an average of the two lenders, Land Registry results and Rightmove asking prices are shown together. (Note that the Land Registry is always at least one month behind with results.)

HPI June 2011 - click on image to expand

HPI June 2011 - click on image to expand

You can see from this that considered on the long term basis house prices are pretty stable.

One feature that sticks out is that asking prices are still increasing relative to the actual prices experienced by both lenders and the Land Registry. This ‘optimism index’ seems to show that sellers and/or their agents are not shy in asking well above the realistic price for the property they are selling as the graph below shows. (Here a figure of 1 would mean asking price and selling price were identical. Anything above 1 indicates a higher asking price. The ratio is derived simply by dividing the asking price by the achieved price.)


Optimism Index June 2011 - click on image to expand

This next graph is simply an expanded version of the first showing the snake-pit of the different HPIs over the period.


June 2011 HPI expanded - click on image to expand

So as you can see, a blip here or there is nothing to hang your hat on. The glacial like procession of average house prices continues.

But as the Land Registry pointed out in its last HPI for May, ‘The only region in England and Wales to experience an increase in its average property value over the last 12 months is London with a movement of 2.9 per cent. The North East again experienced the greatest annual price fall with a decrease of -6.9 per cent.’ So overall averages are not what they seem.

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