UK house prices fell by 0.4% month-on-month in August, according to the latest data from mortgage lender Halifax.

That as falling inflation and rising employment have helped to prop up the market, while weak income growth has acted as an offset.

Versus December of 2011 home prices were up by 0.2% and "at a very similar level" to those three years ago (£160,256).

Commenting, Martin Ellis, housing economist, said: "Nationally, house prices continue to tread water, as measured by the underlying trend. Prices in the three months to August were fractionally lower (-0.3%) compared with the previous three months. House prices fell by 0.4% in August with the declines in the past two months largely offsetting the gains in the preceding two months.

"Overall, there has been little change in house prices so far this year with the UK average price in August at a very similar level to the end of 2011. A gradual upward trend in spending power, aided by lower inflation, should help to support housing demand in the coming months. Nonetheless, house prices are likely to remain flat over the remainder of 2012 and into next year."

For economists at Barclays Research: "The fall in the Halifax house price index goes against the Nationwide survey which reported house prices rising by 1.3% month-on-month in August (but falling 0.5% year-on-year). However, we would point out that both series are quite volatile from month to month. It is for this reason that the Bank of England's monetary policy committee looks at the average of 3m/3m growth rates of the two series as a less volatile measure to gauge the underlying trend in the housing market. This showed house prices fell by 0.4% in August and have now been falling for 11 consecutive months. We expect house prices to be marginally lower in 2012 compared with last year as the weakness in demand is likely to be offset by tight housing supply and support coming from the Funding for Lending Scheme."

AB

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