House prices in Britain recovered by 0.6% during July as the property market reversed all of the slump seen in the previous month.

The Halifax today said the mixed pattern of monthly rises and falls in the year to date was consistent with a slowing market.

It expects that house prices will be broadly unchanged across 2010 and said low interest rates and a recovering economy were helping to underpin demand.

The average house price is now £167,425, which is 16% below the peak seen in August 2007.

Halifax said the increase in the number of properties for sale over the past few months, boosted by the recent abolition of Home Information Packs (HIPs), has relieved much of the pressure which was driving up prices in 2009.

June's fall of 0.6%, which followed price declines in April and May, came amid uncertainty over the impact of Chancellor George Osborne's emergency Budget.

Halifax housing economist Martin Ellis said: “The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market.

“It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.

“Low interest rates and a recovering economy, however, are underpinning demand and continue to support the market.”