Halifax recorded a monthly fall for UK house prices in June. According to figures released today by the UK's largest lender, the average UK house price was 0.4% lower in June than in May. The quarterly decline had slowed to 1.9%; that is the average UK house price in Q2, was 1.9% lower than in Q1.

This would have been viewed very positively before May, had the Halifax not shown an astonishing 2.4% increase in UK house prices for the month of May, at which point the Nationwide also recorded a rise of 1.2%. However, the Nationwide saw this increase in prices continue for June, when they recorded the average UK house price as 0.9% higher than in May.

Over the 2 months both indices almost match up; with total growth for May and June combined of around 2% (2% Halifax, Nationwide 2.1%).

Another thing that both indices have in common is the statements attached by their respective economists and housing economists. Both are noting that house prices are currently being driven by marginally increased demand at a time when supply is drastically low.

Price growth on such a base is wholly unsustainable, because the more prices grow the more likely the people holding properties off the market are to begin marketing their house for sale, which in turn would increase supply and possibly cause the direction of prices to turn downward once again.

It is a vicious cycle: supply is unlikely to increase until house prices rise, but if house prices rising increases supply quicker than demand increases then that will cause prices to fall again and may see supply decrease again.

What we need is for demand to increase drastically, and then supply can increase all it wants. But demand will only increase when:

1. the wider economy recovers sufficiently to improve the employment front
2. when vendor realism increases (Rightmove index shows asking prices of newly marketed homes still 40% higher than avg sale prices)
3. and when the banks come out of the twilight zone where mortgages are concerned