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  The average house price rose in June, up 1.2pc in a month.?Photo: GETTY

The average price of a house rose ￡2,010 to ￡163,049, representing the fastest monthly rise since October, according to the mortgage lender’s price index.

The quarterly rate of change, seen as a better indicator of the underlying trends, showed that prices were 0.5pc lower over the three months to June than in the previous quarter. The quarter-on-quarter fall was 1.1pc in May.

Prices were still some 3.5pc under their level at the same time last year, although this was a small improvement on the 4.2pc annual drop recorded in May. Prices were “broadly unchanged” from December.

Halifax said an increase in the number of people in work, coupled with continued low interest rates, had supported the market in recent months. The number of people in employment increased by 80,000 in the three months to April against the previous quarter, according to official numbers.

As for the impact of the Bank of England’s keeping its base rate at a record 0.5pc low, the lender said typical mortgage payments for a new borrower have fallen from a 2007 peak of 48pc of average disposable earnings to just 28pc currently – which it said illustrated how low interest rates have helped improve mortgage affordability.

The recent pick-up in house prices also tallied with a slight improvement in the ratio of house sales to the stock of unsold properties, the lender added, which has traditionally been a good indicator of price trends.

“A slowly improving economy and sustained low interest rates should help to support broad stability in the market over the coming months,” said Martin Ellis, the lender’s housing economist. However, he cautioned: “The market is, however, likely to continue to face significant headwinds which are expected to constrain housing demand. Low earnings growth, higher taxes and relatively high inflation are all continuing to put pressure on household finances.”

Other economists were also wary of viewing the monthly rise as a trend that was likely to be sustained. “Despite the spike up in house prices in June reported by the Halifax, we retain the view that modest overall falls in house prices are more likely than not over the second half of 2011 and the first half of 2012,” said Howard Archer, at IHS Global Insight.

The rival index from lender Nationwide last week showed house prices were flat in June, offering a less optimistic picture of the market. Analysts had expected the Halifax data to likewise offer an unchanged reading.

May also saw a worrying 8pc increase in the average number of properties for sale at estate agents as sales rates fell to the lowest levels since January, RICS said.

UK house prices have been protected from further falls by a lack of supply of properties for sale, with repossessions less prevalent than in the recession of the early 1990s.

However, the survey suggests supply may be growing. Surveyors completed an average of just 14.7 sales each last month and only 5pc more reported a rise in the number of sales compared to a fall. Meanwhile, new vendor instructions increased by a balance of 15pc.

This means house prices remain under pressure, with 28pc more surveyors reporting price falls rather than rises in May. Looking forward, 27pc more respondents in the survey expect prices to fall rather than rise over the next three months.

Many surveyors blamed the number of bank holidays in April, including the Royal Wedding weekend, for the flattening of demand in May with new buyer enquiries down for the month.

However, London – where ￡3.7bn of foreign money is pouring into prime property every year – continued to outperform in May. It was the only region to report a rise in house prices in the month. In contrast, the West Midlands had the highest balance of surveyors who reported further price drops at 64pc, followed by Wales and Northern Ireland, both at 43pc.

Ian Perry, a spokesperson for RICS, said: “Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon. Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.

“On the other hand, the appetite to rent is continuing to grow. And, with little new supply coming onto the lettings market, the cost of renting is increasing and will continue to do so.”

The RICS survey is in line with figures released by Halifax and Nationwide for May, which also pointed to a subdued market.

Halifax said house prices remained broadly unchanged during the month, rising by just 0.1pc, while Nationwide said they crept ahead by 0.3pc.

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  There is just a 53pc chance that house prices will have risen by 1pc in 2020, warns PricewaterhouseCoopers?Photo: REUTERS

Real house prices, accounting for inflation, will still be 12pc below their 2007 high in 2015, PwC said. By 2020, there is just a 53pc chance that house prices will have risen 1pc, the firm said in its UK economic outlook.

John Hawksworth, chief economist at PwC, said: “We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years. This reflects the dampening impact of declining real income levels and continued tight credit conditions for first time buyers in particular.”

The report came alongside fresh evidence that the market continues to stagnate. The Royal Institute of Chartered Surveyors (RICS) found that house prices fell in June, demand from buyers remained stagnant and supply dropped back. The Council of Mortgage Lenders (CML) also revealed that the value of lending in May was unchanged on the month at ￡5.9bn and below last year’s ￡6.3bn.

“The UK housing market faced a stalemate during June… Demand has been broadly flat for the past six months,” RICS said. “Chartered surveyors report that because the market remains difficult to access, the only buyers who can really be considered serious are those who have already sold their property, or have a mortgage agreement in place.”

The majority of surveyors expect house prices to fall over the next three months. However, both RICS and PwC pointed out that London remains the exception. The capital is the only region in the country to be experiencing rising prices, RICS said.

Economic growth in London is also charging ahead, with PwC forecasting expansion of 1.7pc this year against the national average of 1.3pc. Northern Ireland, Scotland and the North East are predicted to be worst hit. All are expected to grow by less than 1pc in 2011.

PwC expects 2012 to be better, at 2.2pc – driven by exports and business investment, with London and the South East outperforming the rest of the UK.

The weakness of the consumer and the slow rebalancing of the economy are taking their toll, with some economists predicting that growth in the three months to June was negative. Alan Clarke at Scotia Capital, one of the bears alongside Citi, yesterday estimated that there is a 25pc chance the Bank of England will restart quantitative easing “at the turn of the year”.

The majority of economists believe growth in the second quarter was around 0.3pc – weaker than originally expected. However, Mr Clarke said: “We expect that growth will recover during the third quarter.”

  Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market by being seasonally adjusted. ?Photo: AP

Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market through the “nonsense” of being seasonally adjusted.

“The way providers of house price indices seasonally adjust their figures is a farce (or, seasonally adjusted, a comedy),” said Mr Boulger. “In many months the seasonal adjustment skews the real figures so much the result is that the comment generated is often misleading.”

As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy.

Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices.

“To help restore confidence in all UK house price statistics, not just those from Nationwide and Halifax, I suggest all providers should give at least as much prominence to the real figures as they do to the seasonally adjusted ones,” added Mr Boulger.

House prices are a particularly sensitive subject for those involved in the housing market as falling prices tend to stifle activity. The Government is currently undertaking a review of the subject. According to Mr Boulger one of the key recommendations should be that “real” figures should be published alongside seasonally adjusted ones.

He said: “Whilst it is true that activity in the housing market tends to be seasonal, this doesn’t automatically mean that prices are impacted by the seasons.”

A spokesman for Nationwide said: “We think prices are seasonal. To look at individual months would not give the full picture.”

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Halifax said the average price of a home stood at ￡160,519 in May, representing a 0.1pc month-on-month rise. However, prices fell 4.2pc in the three months to May compared with a year ago – the biggest fall since October 2009.

Analysts had forecast a monthly rise of 0.2pc, with a three-month annual decline of 4.1pc, after April’s 1.4pc monthly fall and three-month decline of 3.7pc.

“The fact that Halifax reported that house prices could only rise fractionally in May after a particularly sharp drop in April reinforces our view that further weakness lies ahead in the face of ongoing muted housing activity and difficult economic fundamentals,” said Howard Archer, economist at IHS Global Insight.

Britain’s housing market has been slowing since the middle of last year and recent data show mortgage approvals – a leading indicator of house prices – fell in April to just half their long-run average before the financial crisis of 90,000 per month.

Halifax economist Martin Ellis said the housing market was coming under pressure from low earnings growth, higher taxes, rising inflation and concerns about the outlook for jobs and growth.

“These factors are probably constraining demand and applying some downward pressure on prices,” he said.

However, he said a modest economic recovery and record low interest rates should help to stabilise prices later in the year.

The Bank of England has held interest rates at 0.5pc for more than two years and is expected to leave them on hold until around the turn of the year amid signs that the economic recovery is losing steam.

The weak housing data came after another survey showed retail sales unexpectedly fell in May as consumers tightened their belts after splashing out in April.

  There is just a 53pc chance that house prices will have risen by 1pc in 2020, warns PricewaterhouseCoopers?Photo: REUTERS

Real house prices, accounting for inflation, will still be 12pc below their 2007 high in 2015, PwC said. By 2020, there is just a 53pc chance that house prices will have risen 1pc, the firm said in its UK economic outlook.

John Hawksworth, chief economist at PwC, said: “We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years. This reflects the dampening impact of declining real income levels and continued tight credit conditions for first time buyers in particular.”

The report came alongside fresh evidence that the market continues to stagnate. The Royal Institute of Chartered Surveyors (RICS) found that house prices fell in June, demand from buyers remained stagnant and supply dropped back. The Council of Mortgage Lenders (CML) also revealed that the value of lending in May was unchanged on the month at ￡5.9bn and below last year’s ￡6.3bn.

“The UK housing market faced a stalemate during June… Demand has been broadly flat for the past six months,” RICS said. “Chartered surveyors report that because the market remains difficult to access, the only buyers who can really be considered serious are those who have already sold their property, or have a mortgage agreement in place.”

The majority of surveyors expect house prices to fall over the next three months. However, both RICS and PwC pointed out that London remains the exception. The capital is the only region in the country to be experiencing rising prices, RICS said.

Economic growth in London is also charging ahead, with PwC forecasting expansion of 1.7pc this year against the national average of 1.3pc. Northern Ireland, Scotland and the North East are predicted to be worst hit. All are expected to grow by less than 1pc in 2011.

PwC expects 2012 to be better, at 2.2pc – driven by exports and business investment, with London and the South East outperforming the rest of the UK.

The weakness of the consumer and the slow rebalancing of the economy are taking their toll, with some economists predicting that growth in the three months to June was negative. Alan Clarke at Scotia Capital, one of the bears alongside Citi, yesterday estimated that there is a 25pc chance the Bank of England will restart quantitative easing “at the turn of the year”.

The majority of economists believe growth in the second quarter was around 0.3pc – weaker than originally expected. However, Mr Clarke said: “We expect that growth will recover during the third quarter.”

  Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market by being seasonally adjusted. ?Photo: AP

Ray Boulger of mortgage broker John Charcol said the Nationwide and Halifax reports distort the market through the “nonsense” of being seasonally adjusted.

“The way providers of house price indices seasonally adjust their figures is a farce (or, seasonally adjusted, a comedy),” said Mr Boulger. “In many months the seasonal adjustment skews the real figures so much the result is that the comment generated is often misleading.”

As an example Mr Boulger said the underlying figures from the indices show a small rise over the first five months of the year, 0.5pc for Halifax and 3.1pc for Nationwide, but then he points out the picture given by the seasonally adjusted figures can be far more gloomy.

Both mortgage providers use seasonally adjusted figures to smooth the variations in their figures and to account for the natural variations in prices driven by changes in buying patterns during the year. Both figures are based on mortgage valuations, rather than underlying selling prices.

“To help restore confidence in all UK house price statistics, not just those from Nationwide and Halifax, I suggest all providers should give at least as much prominence to the real figures as they do to the seasonally adjusted ones,” added Mr Boulger.

House prices are a particularly sensitive subject for those involved in the housing market as falling prices tend to stifle activity. The Government is currently undertaking a review of the subject. According to Mr Boulger one of the key recommendations should be that “real” figures should be published alongside seasonally adjusted ones.

He said: “Whilst it is true that activity in the housing market tends to be seasonal, this doesn’t automatically mean that prices are impacted by the seasons.”

A spokesman for Nationwide said: “We think prices are seasonal. To look at individual months would not give the full picture.”

Visit Telegraph Mortgage Services for free mortgage advice

May also saw a worrying 8pc increase in the average number of properties for sale at estate agents as sales rates fell to the lowest levels since January, RICS said.

UK house prices have been protected from further falls by a lack of supply of properties for sale, with repossessions less prevalent than in the recession of the early 1990s.

However, the survey suggests supply may be growing. Surveyors completed an average of just 14.7 sales each last month and only 5pc more reported a rise in the number of sales compared to a fall. Meanwhile, new vendor instructions increased by a balance of 15pc.

This means house prices remain under pressure, with 28pc more surveyors reporting price falls rather than rises in May. Looking forward, 27pc more respondents in the survey expect prices to fall rather than rise over the next three months.

Many surveyors blamed the number of bank holidays in April, including the Royal Wedding weekend, for the flattening of demand in May with new buyer enquiries down for the month.

However, London – where ￡3.7bn of foreign money is pouring into prime property every year – continued to outperform in May. It was the only region to report a rise in house prices in the month. In contrast, the West Midlands had the highest balance of surveyors who reported further price drops at 64pc, followed by Wales and Northern Ireland, both at 43pc.

Ian Perry, a spokesperson for RICS, said: “Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon. Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.

“On the other hand, the appetite to rent is continuing to grow. And, with little new supply coming onto the lettings market, the cost of renting is increasing and will continue to do so.”

The RICS survey is in line with figures released by Halifax and Nationwide for May, which also pointed to a subdued market.

Halifax said house prices remained broadly unchanged during the month, rising by just 0.1pc, while Nationwide said they crept ahead by 0.3pc.

Visit Telegraph Mortgage Services for free mortgage advice