Demand for homes is rising, the Halifax said
House prices are now rising, according to the latest survey from the Halifax mortgage lender.
The cost of the average house went up by 1.1% in July to £159,623.
Prices in the three months to July were 0.8% higher than in the previous three months, the first increase in the underlying trend since October 2007.
Housebuilder Taylor Wimpey also said it was seeing signs of a turnaround, with its sales rising in the first six months of the year.
The prices of the properties it had sold had now stopped falling and its order book had risen by 67% since the end of last year.
"There are signs that the situation is beginning to improve," the company said.
Despite this the firm recorded a half year loss of £682m, mainly due to again having to reduce the value of its stock of building plots.
The annual rate of house price decline, recorded by the Halifax, has now shrunk to just 12%, from 15% in June, moving in a similar direction to that of the Nationwide's rival survey.
"Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates," said Martin Ellis, the Halifax's housing economist.
"Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months," he added.
Last week the Nationwide building society also said prices had risen in July, with the underlying trend as measured by its own survey moving upwards at the fastest rate since February 2007.
"It seems more likely than not that prices may edge up further in the next few months," said Brigid O'Leary, senior economist at the Royal Institution of Chartered Surveyors (Rics).
"But that doesn't change the fact that the housing market, in terms of transactions, is still in a fairly depressed state," she added.
Despite the apparent turnaround in the UK's dramatic house price slump, both the Halifax and the Nationwide are being very cautious and are refusing to predict that prices will now keep on going up.
In fact, the Halifax's parent company, the Lloyds banking group, still expects house prices to have fallen by 7% over the course of this year.
Many properties that might have been put up for sale are still being let to tenants instead.
And some homeowners in financial difficulty are only avoiding repossession because the record low level of interest rates has dramatically reduced the burden of making their monthly mortgage repayments.
Experts say that if the apparent revival of prices encourages more people to try to sell their homes, or interest rates rise, then the balance of supply and demand could tilt, leading to a renewed downturn in prices.
"There is a stark shortage of property on the market and this, above all, is driving the rebound we are seeing," said David Smith of property consultancy Carter Jonas.