The Halifax has reported that the housing market is still slowing down, in spite of a surprising jump of £1,500 in the cost of an average home in July.
Halifax’s latest House Price Index showed a 0.7% rise in the price of property in July, taking the cost of an average home up to £198,915 from £197,450 in June.

The average cost of a home is fast approaching £200,000, but Halifax, the UK’s biggest mortgage lender, still reckons that the market is slowing down, as July was the fourth consecutive month to show an increase less than 1%.

Current annual house price inflation, but Halifax’s figures, is 11.2%, but Halifax’s latest forecast for the inflation for the whole of 2007 is 6% (they increased from 4% a couple of weeks ago). It will take more of a slowdown than this to come down to that 6% figure for the year.

Halifax chief economist, Martin Ellis, said: “We expect the downward trend in house price growth to continue as the five interest rate rises since last summer have an increasing impact on household spending and housing demand. Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale, particularly in London and the South East, will, however, continue to support house prices.”

The growth in prices shown by Halifax contrasts sharply with Nationwide’s figures which reported only a 0.1% increase in July. Property information group Hometrack’s figures agreed with Nationwide’s.

Experts suggest that the five base rate rises in the last 12 months are finally having their impact on the housing market. But there is undoubtedly more to come as many industry watchers believe that the true impact of the five rises has yet to hit most homeowners. Meanwhile, earlier this week the Bank of England reported this week that mortgage lending for home purchases remained robust in June while remortgages dipped slightly following a May rush to beat rising rates.