House builders are still increasing prices despite complaining of falling sales and seeking government aid.

The Halifax house price index showed new homes in July cost 1.1% more than a year earlier, even though prices across the whole market had fallen by 10.9%.

One London estate agent said: 'The developers are in denial. They think the fall in the housing market doesn't apply to them.'

Builders are providing many other incentives to purchasers but remain reluctant to cut prices. They are offering to pay stamp duty as well as legal and survey charges and loan fees, and they will waive the demand for mortgage deposits.

And even before Gordon Brown announced a similar scheme last week, many builders, including Crest Nicholson, were offering interest-free loans for five years on a quarter of the price for people buying new homes. Taylor Wimpey had extended that offer to 10 years on some sites.

Independent on Sunday