Government figures show annual fall of just 0.3%, against recent lender reports of 10% decline

A small recovery in house prices during July has slowed decline in the housing market, according to government figures released today.

The price of the average UK home rose by around 1% to 拢217,171 in July, up from 拢215,029 in June, announced the Department for Communities and Local Government (DCLG).

This helped to slowed the quarterly rate of UK house price falls, with a drop of just 0.5% in the three months to the end of July following a 1.3% fall in the previous quarter.

House prices in the UK were on average just 0.3% lower in July than in the same month a year ago, according to the DCLG. By comparison, mortgage lenders have recently reported annual house price falls of over 10%.

Homes for first-time buyers fell by 1.6% in the year to July, DCLG figures show.

Howard Archer, chief UK economist at Global Insight, told the Guardian that the outlook remained dismal. 鈥淚t seems odds-on that house prices will head downwards for some considerable time to come,鈥� he said, 鈥減articularly as lending conditions could well tighten further in the near term, at least amid the current turmoil caused by the collapse of Lehman Brothers.鈥�

Archer told the Guardian that he expected house prices to fall 15% in 2008 followed by a further 12% decline in 2009.

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