The bank said the number of first-time buyers was now at its lowest level since records began in 1974.

This was causing house price growth gradually to slow, it said. Three months ago, house prices were rising at an annual rate of 24% while last autumn the figure was more than 30%.

The number of first-time buyers fell to 174,000 in the first six months of this year, down more than 30% from the corresponding period of last year, Halifax said.

Trading up

The bank attributed the month-on-month rise in prices to confident homeowners trading up.

And a recent report from UCB home loans suggested there were clear signs that the buy-to-let market was also supporting price growth.

Buy-to-let lending totalled �6.7bn in the last six months of 2002, compared with �5.5bn in the first half of 2002.

According to Halifax, the average price of a house sold in the UK in July was �132,079, an increase of more than �20,000 on a year ago.

The Halifax survey chimes with the latest report from the Nationwide building society.

It said house prices increased by 1% in July and said the number of first-time buyers was at a 20-year low.

Both institutions also say the gradual slowing in annual house price growth will not turn into a crash.

"The housing market is strong. With mortgage rates at a 50 year low, benign employment prospects and affordability levels well below the long term average, the housing market continues to be underpinned by strong fundamentals," said Martin Ellis, Halifax's chief economist.