House prices increased by 2.6% in May following months of falls, reported Halifax today, although the lender warned people not to place too much emphasis on one month’s results. For instance prices in the three months to May were 3.1% lower, although the rate of decline has slowed from the 5-6% in the second half of last year.

‘Historically, house prices have not moved in the same direction month after month even during a pronounced downturn,’ said Nitesh Patel, housing economist for Halifax.

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He also said there are some indications of a stabilisation in activity: ‘The number of mortgages approved to finance house price purchase increased by 19% between the final quarter of 2008 and the first quarter of 2009… House sales remain substantially below their long term average and market conditions are expected to remain difficult with housing activity continuing at low levels over the coming months.’

Seema Shah, economist at Capital Economics said they still think there’s a long way to come out of the woods yet: ‘It is plausible that the next few months may bring further signs of a stabilisation in house prices, or even further small increases. But there are good reasons to believe that any temporary lull will not herald the end of this housing market correction.’

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