BOOST FOR PROPERTIES AS PRICES RISE 1.6%

Property values climbed 1.6 per cent last month to a UK average of £163,533, thanks to growing demand and a shortage of homes for sale driving up prices, according to the Halifax.

Homeowners have seen the value of their properties swell by an average of 5.9per cent – or £9,000 – since the market’s April low point.

The Halifax said that a combination of cheaper houses, caused by the steep falls since mid-2007 and record low interest rates had been key factors in stimulating demand.

But it warned that rising unemployment and wage freezes could soon slow demand.

Further mortgage rate cuts were announced yesterday by the Woolwich, Northern Rock and Abbey in a welcome sign of returning competition between the major lenders.

Ray Boulger, senior technical manager at John Charcol, said: “We are beginning to see a little bit of competition coming back into the market.

“But that’s not to say we are going to get back to the stage where they are competing for higher loan-to-value business.”