January house prices remain level

Halifax has published its January house price index indicating that property prices remained level during the month, with the price of the average home at £197,244.

However, the annual rate of house price inflation fell to below 5% in January, its lowest level since November 2005.

The decrease reflects the fact that in December, annual inflation stood at 5.2%, house prices having unexpectedly increased by 1.4% during the month (seasonally adjusted from the 1.3% originally reported by Halifax).

Annual house price inflation peaked in August of last year at 11.4% but for the following three consecutive months it fell, so that the average home now costs £7,628 more than a year ago.

The Halifax figures are supported by recent data from Nationwide and are being interpreted as evidence that while the UK property market is slowing, it is still showing resilience.

Howard Archer, chief UK economist at Global Insight, the economic analyst, reflects: “The fact that house prices did not plunge in January reinforces belief that the Bank of England will limit a widely expected interest rate cut on Thursday to 25 basis points from 5.50% to 5.25%. Still, significant inflationary pressures are limiting the scope for aggressive Bank of England action on Thursday.”

Halifax is happy to repeat its earleir forecast that house prices will remain flat throughout 2008.

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