A 0.2% increase in house prices last month has hauled the cost of a home back close to levels seen at the end of 2009, according to the latest report.

An average home will now set you back just under £168,000 following this latest rise and July's 0.7% jump, reversing much of the modest decline in the three months before that.

That's 4.6% higher than a year ago using a three-month average price, a little less than July's 4.9% and a continuation of the downward trend fro May's 6.9%.

August's figure was 0.6% below prices in December last year of about £169,000, the Halifax revealed. The current average is 9% higher than in April 2009, but 16% less than in August 2007.

"Activity has also been largely static since the start of the year. These developments suggest that the market is broadly stable with house price inflation having cooled since last year when supply shortages helped to push up prices," said Martin Ellis, housing economist at Halifax-owner HBOS.

"The improved economy, strengthening labour market and low interest rates are all supporting housing demand. We expect that UK house prices will remain static overall in 2010."

First time buyers are doing better, the report finds. Lower house prices and interest rate cuts mean the proportion of disposable earnings devoted to mortgage payments has almost halved from a peak of 50% in mid-2007 to 28% - below the 34% average over the past 25 years.

Earlier today, South East-based housebuilder Berkeley reported demand in London has held up over the past three months, though business is tougher outside the capital and it is concerned over the changes to the planning process.

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