Annual change in average UK house prices for the past 18 months

House prices are on the up once more, which raises the question: is now the time to get back into a perkier property market?

The ­figures from mortgage lenders certainly suggest so. Nationwide has ­reported a 1.3 per cent rise in prices following­ similar ­increases in June and May, while Halifax also posted a rise – its second in three months.

The growth may seem minuscule but it arrests the steady freefall in prices since 2007. With property values clawing their way upwards, prospective buyers suddenly fear missing out on rock-­bottom prices.

Sarah Gaffney, 28, of ­Dulwich, has starting looking at properties for this reason. “As house prices have gone down I’ve been looking at what bargains are out there before they start to go up dramatically,” says Gaffney, a project coordinator.

“The deposits required for a mortgage are huge but I’ve ­noticed better rates, so hopefully it’s a matter of time ­before I can ­afford something.”

Stephen Birch, of Brixton, has also caught buyers’ fever. So anxious is he to avoid jeopardising the offer he put in for a two-bed flat over the weekend, he’s asked us to give him a pseudonym.

“Before the viewing, I told myself I wouldn’t muck about and instead would go straight in with the asking price,” says Birch. “I was afraid that I’d miss the boat otherwise, as the next two-bed available on the road I’m looking at could be ­valued higher by the estate agent.”

Birch, a recruitment ­consultant, is hoping to cash in on Crystal Palace. The East London Tube line extension is set to further open up the area to commuters next year, ­meaning there’s likely to be a rise in property values.

But despite signs of recovery, today’s ­market may not be the best for ­prospective ­buyers to enter.

“There’s still a long way for prices to fall,” says Ed Stansfield, of Capital Economics. “The impact of ­renewed ­interest in spring has given an exaggerated bounce to a shallow market. There’s not an ­economic backdrop to sustain price increases.

“We think that a further 15 per cent will come off house prices, which means that, in a year or so, there would be a ­better point to buy.”

What we’re seeing is more ­viewers per house on sale, explains Stansfield. Before Christmas, the vendor who had few viewers would accept a low price but now sellers can afford to play hardball.

This is mainly down to fewer properties on the market but, once potential sellers get wind of the upturn, properties will flood the market again, bringing prices back down. Stansfield’s prediction chimes with what has ­happened in the past. In the early 1990s recession, Halifax posted stretches of monthly price rises, only for prices to fall again.

This time round, the ­biggest hurdle is the lack of mortgage availability. Too many banks have had their fingers burnt by negative ­equity to offer decent rates for anyone with less than a 30 per cent deposit.

Despite recent increases in the level of lending, the Council of Mortgage ­Lenders is keeping its pessimistic view of miserly banks. It predicts a 40 per cent drop in the amount of capital banks will lend to mortgage applicants this year, compared with 2007. And the situation will look even gloomier when the Bank of England eventually decides to put its historically low base rate up again.

However Peter O’Donovan, of Bestinvest, points out that Abbey and Woolwich are ­leading the way with favourable rates for those with a 30 per cent deposit. A two-year fixed-rate of 4.29 per cent with Woolwich is in line with deals ­offered with a higher deposit.

Unemployment is another factor keeping house price rises on a leash. While prices show signs of recovery, the number of people out of work shows no sign of improving (see box, right). If people fear for their job, the thought of ­increasing their financial burden by owning a property is an unattractive one.

Stansfield says: “It’ll be ­astonishing if house prices recover in a straight line. Small shifts in the property market will see recovery ­being an up-down one.”

Reasons not to rush back into the housing market

• Mortgage Availability Despite a small spike in the amount of money banks are lending to mortgage applicants, the Council of Mortgage Lenders predicts lending this year will be 40 per cent lower than in 2007.

• Unemployment Today it hit 2.4m and is predicted to rise to 3m nationwide by 2010. The jobless can’t save for a deposit, while those with insecure jobs will think twice before entering the property market.

• Interest Rates The all-time low in the Bank of England base rate – 0.5% – won’t last forever. Homeowners will get a shock when the Bank raises it