House prices in the latest three months were 3.6% higher than in the preceding three months, the Halifax has reported.

Prices in the three months to July were 10.2% higher than in the same three months a year earlier. This continued the upward trend in the annual rate.

After recording a decline in June, monthly house prices grew by 1.4% in July. Monthly movements, however, can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend, the Halifax said. Since last December there have been four monthly price increases and four price falls.

Although home sales have edged down by 6% since a recent peak in February, they are close to 103,000. Home sales during the April to June quarter were 21% higher than in the same three months last year.

Stephen Noakes, mortgages director, said: “House prices in the three months to July were 3.6% higher than in the three months to April. Annually prices were 10.2% higher in the three months to July than in the same three months last year.

“While supply remains low, housing demand continues to be supported by a continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates. However, earnings growth is still lagging behind consumer price inflation.”