House prices increased for the third month in a row in July, according to a closely watched measure, raising hopes that the housing market is on the road to recovery. But economists remain extremely wary of forecasting that housing is heading back into another boom.

Prices rose by 1.3% this month, after increases of 1% in June and 1.3% in May, an index produced by the Nationwide building society showed. The rise in July left house prices 14.6% lower than their late-2007 peak, 6.2% lower than a year ago and 1.3% higher than at the start of the year.

Prices have increased at a 10.7% annualised pace over the past three months, the fastest change since February 2007, and a rapid turnround from as recently as this February, when prices were still falling at a 17% annualised rate.

Financial Times, The Times, The Independent