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Housing market continues to be hit by low sales

On an annual basis, prices in August were 2.6% lower as measured by the average for the three months to August against the same period a year earlier. The annual rate is the same as in July.

Meanwhile, the industry-wide number of mortgages approved to finance house purchase – a leading indicator of completed house sales – increased for the third successive month in July, to 49,200 on a seasonally adjusted basis, according to the latest Bank of England figures. In addition, approvals were 2.5% higher than a year earlier.

Despite rising to the highest level since May 2010, the number of approvals remains within the range of 45,000-50,000 per month where it has been since the beginning of 2010.

Halifax Housing economist Martin Ellis said: "The underlying trend, as measured by the latest three months compared with the preceding three months, showed a modest improvement in house prices for the second consecutive month in August. Prices in the three months to August were 1.0% higher than in the previous three months.

"As we have pointed out before, the current low volume of sales tends to make house prices volatile from month to month. The 1.2% fall in August follows three months when prices have risen. As a result, the more reliable quarterly change, which smoothes out some of the monthly volatility, shows a rise in prices of 1.0%.

"A recent decline in average mortgage rates has further boosted home affordability for those able to raise a deposit to make a new purchase. Low interest rates are likely to continue to support the market whilst increased uncertainty about the economic outlook and pressures on householders’ finances constrain demand. Overall, we expect broad stability in both prices and activity over the coming months."

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