Hopes that the housing market may be starting to bottom out were boosted on Tuesday, when new figures showed that house prices had risen in June for the third time in four months.

Prices rose by 0.9 per cent during the month, adding nearly £2,500 to the value of an average property, figures from Nationwide showed.

The annual decline in prices also eased to 9.3 per cent last month, compared with 11.3 per cent in May. This is the first time that the year-on-year fall has been in single digits since July last year. The average price of a property is now £156,442, up from a low of £147,746 in February, Nationwide said.

However, questions remain about whether the rally in prices, also reflected in recent house price data from Halifax, can be sustained. Analysts said that a lack of houses for sale was propping up prices as buyers competed for fewer properties.

Martin Gahbauer, Nationwide’s chief economist, said: “There continues to be a relentless drop in the stock of property available for sale, as potential sellers and builders have responded to depressed demand conditions.”

There are fears that, as sellers become more confident, there could be a flood of new properties on the market, sending prices down. Seema Shah, property economist at Capital Economics, said that rising unemployment would also drag on prices: “We remain sceptical that this is the start of a sustained upward trend. House prices are still overvalued, the recovery in activity appears to be wavering, unemployment is set to rise further and credit conditions remain tight.”

Rising unemployment has also forced many more homeowners into mortgage difficulties as they struggle to meet their monthly repayments. Consumer groups accused mortgage lenders of handling such cases poorly and called government schemes to prevent repossessions “ineffective”. Representatives from Citizens Advice, Which? and Shelter, the housing charity, told the Treasury Select Committee that lenders were failing to disclose enough information on how they manage arrears cases. Which?, the consumer group, also accused the Financial Services Authority of being too slow in penalising lenders who are guilty of bad practice and of failing to name and shame culprits.

Kay Boycott, director of communications, policy and research at Shelter, said that rising unemployment could also lead to a further increase in repossessions. About 40,000 properties were repossessed last year.

The hearing coincided with the publication of figures that showed only six households out of a target of 6,000 have so far benefited from one repossession avoidance initiative — the Mortgage Rescue Scheme — introduced six months ago.