According to the Nationwide Building Society, UK house prices rose 1.6 per cent in August. This rise is the biggest increase that they've reported since December 2006.

The annual rate at which prices are falling also continued to ease during August, narrowing to just 2.7 per cent, down from 6.2 per cent in July. The Nationwide said prices were now 3.2 per cent higher than at the beginning of 2009 at an average of £160,224, although it added that they were still 14.4 per cent below their peak in October 2007.

According to economists from the Center for Economics and Business Research (CEBR) house prices will show modest increases next year as the property market bottoms out about 25% below the 2007 peak. They say that the nosedive in prices means that the market has almost hit it's floor. The report goes on to say that prices will rise 2% next year and 3.5% in 2011.

The CEBR believes that a further 3-5% fall in prices could hit the market but the undersupply of housing and a predicted increase in mortgage lending in 2010 will prevent prices falling much further.

According to a report produced by the National Institute of Economic and Social Research the house price slump will persist until mid 2011 despite recent signs of a turnaround.

The report said that the temporary rise in prices is probably the result of limited supply. An Economist from the NIESR went on to say "There has been talk of stabilisation and some recovery in the housing market, but we don't think this is the case. We only see growth in the housing market returning in 2012, "

According to the Halifax, the nations largest mortgage lender, house prices fell by 0.5% in June. This now puts the average property price at £157,713 which is down from £158,565 in May.

This means prices have now returned to levels last seen in May 2004. However, the index shows that the annual rate of decline has continued to slow down to 15% in the 3 months to June whereas it was previously at 16.3% in the 3 months to May.