May boon for UK house prices

The sharpest monthly increase in UK house prices in seven years was felt last month, the Halifax has said.

In its monthly index the building society revealed a 2.6 per cent jump in prices in May, which cut the annual drop in prices to 16.3 per cent.

Nationwide also recently reported an increase in May, although at the slightly lower level of 1.2 per cent.

Halifax now says there are "tentative" signs of a housing market stabilisation.

"Historically, house prices have not moved in the same direction month after month even during a pronounced downturn," said its housing economist Nitesh Patel.

"For example, prices fell by 11 per cent nationally during 1991 and 1992, but there were five monthly price rises in this period."

Economists are however still predicting house prices to fall on an annual basis until summer next year.