House prices hit record high in July - Halifax

House prices grew faster than expected in July, hitting a record high as pressure on household finances begins to ease, according to Halifax.

The annual pace of house price growth rose 3.3%, smashing economists' forecasts for a 2.6% increase, helping average prices hit a new record high of £230,280.

The figure compares with the 1.8% recorded in June and represents the largest increase since last November.

Month on month and quarterly prices also grew, by 1.4% and 1.3% respectively.

"Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices," Russell Galley, managing director at Halifax, said.

Halifax also pointed to a "robust" labour market, notably the recent increases in people in full-time employment.

The Bank of England's recent decision to raise interest rates from 0.5% to 0.75% is not expected to have a significant effect on either mortgage affordability or transaction volumes, Halifax said.

However, Mr Galley added: "While the quarterly and annual rates of house price growth have improved, housing activity remains soft.

"Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year."

Howard Archer, chief economic adviser at the EY ITEM Club, also struck a note of caution.

He said: "We remain dubious that the housing market is seeing a sustainable shifting up of a gear.

"Housing market activity is still relatively lacklustre and we expect it to remain so as the extended squeeze on consumer purchasing power only gradually eases, consumer confidence is relatively fragile and appreciable caution persists over engaging in major transactions.

"Potential house buyers may also be concerned that they are likely to face further interest rate hikes over the medium term following August's hike."