Halifax urges caution as house prices rise 1.9%

| February 5, 2009 | 0 Comments
Halifax urges caution as house prices rise 1.9%

Some good news at last on the UK housing market!

The monthly house price index from Halifax shows that eleven consecutive months of falling prices have been interrupted by an average rise of 1.9% in January.

The turnaround brings the average price of a home to £163,966 or £4,000 more than in December 2008.

The result will have surprised most analysts as predictions of a 15% fall during 2009 are commonplace.

The reversal is also impressive in its scale, as prices last rose in January 2008 but only by 0.1%.

However, Halifax is cautious about monthly changes, preferring instead to focus on three-month figures.

Using this method, the lender calculates that the annual rate of decline increased to 17.2% in January, from 16.2% in December.

Halifax’s chief economist, Martin Ellis, drives the point home by explaining “house prices have not moved in the same direction month after month even during a pronounced downturn”.

Mr Ellis also says he has noted some very early signs that activity in the market may be stabilising but nevertheless expects 2009 to be a difficult year.

Possible green shoots could include December’s approval figures for new mortgage lending, which increased by 4,000 on November, to 31,000.

In addition, mortgage search engine, mform.co.uk, recently reported that applications from first-time buyers have increased 30%.

Nationwide’s findings for January are vastly different from Halifax’s, with a further fall in prices of 1.3%. Hometrack was a little better at minus 1% for the month.

Finally, Halifax has revised its December figure, correcting the average rate of decline for the month to 1.6% (2.2%).

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