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House prices 'up 1.9% in January' House prices 'up 1.9% in January'
(10 minutes later)
The price of UK homes rose by 1.9% in January, ending a run of 11 monthly falls, according to the Halifax. The price of UK homes rose by 1.9% in January, compared to December, according to the Halifax.
Despite January's rise, the annual change in house prices showed a fall of 17.2%, the Halifax said. However it warned that one month's figures did not indicate an end to the downward trend in prices, which it says have dropped 17.2% in the past year.
The average house price reached £163,966 according to the data, which is based on mortgage approvals. The average house price has now reached £163,966, according to the Halifax.
Last week, a survey by Nationwide suggested prices fell by 1.3% in January, saying job worries were set to put people off buying new homes. Last week, a survey by Nationwide suggested house prices fell by 1.3% in January, and they said job worries were putting off people buying homes.
When simply comparing the average price in January with the average price a year ago, the Halifax survey suggests that prices are down by 16.8% from £197,243 in January 2008. Martin Ellis, chief economist at the Halifax, said his bank's latest survey did not mean the property market had reached a turning point, after last year's dramatic slump in mortgage lending, completed sales and prices.
But the lender prefers to compare the average price for the past three months with the average price for the same period a year ago, which produces its current estimate of a 17.2% annual fall. "It's far too early to make any conclusion," he said.
'Difficult year' "The figures are going against the trend and our survey shows that if you compare the last three months to the previous three [months] then prices are still down significantly, by about 5%," he added.
"There are some very early signs that market activity may be stabilising, albeit at quite a low level," said Halifax chief economist Martin Ellis. 'Modest rise'
Market experts are still agreed that prices will keep falling this year, probably until the economy stops shrinking, with continued restrictions on credit reducing the number of people taking out mortgages.
However earlier this month, the Bank of England reported that the number of new mortgages approved for home buyers had picked up slightly in December.
House price surveys explainedHouse price surveys explained
"Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market." The 31,000 mortgage approvals were up from 27,000 in November, though they were still the second lowest figure on record.
Earlier this month, the Bank of England reported that the number of new mortgages approved for home buyers picked had up slightly in December. Estate agents have also been reporting more would-be homebuyers registering with them, though so far these have not yet been converted into a consistent rise in sales.
However the 31,000 mortgage approvals, up from 27,000 in November, was still the second lowest figure on record. "The Halifax report is consistent with the recent modest rise in activity as shown in our own surveys," said Brigid O'Leary, a senior economist at the Royal Institution of Chartered Surveyors (Rics).
Credit restriction The Bank of England has been cutting the base rate sharply in recent months in an effort to stave off recession.
Estate agents have been reporting more would-be homebuyers registering with them, but these have not yet been converted to sales.
And observers say that the housing market is unlikely to improve until the economy stops shrinking, with continued restrictions on credit reducing the number of people taking out mortgages.
The UK economy is now deemed to be in recession having recorded two consecutive quarters of negative growth.
The Bank of England has been cutting the base rate sharply in recent months in an effort to stimulate the economy.
It is expected to trim the rate further later on Thursday, with most analysts expecting a cut from 1.5% to 1%.It is expected to trim the rate further later on Thursday, with most analysts expecting a cut from 1.5% to 1%.
Different surveys
One explanation for the Halifax survey recording a rise in prices in January, while the Nationwide reported a fall, is that they cover different time periods as well as just their own lending activity.
"We report prices for the full calendar month, while the Nationwide reports sales from the 20th of one month to the 20th of the next, so they may have include some sales that took place at the end of December," Mr Ellis explained.
When simply comparing the average price in January with the average price a year ago, the Halifax survey suggests that prices are down by 16.8% from £197,243 in January 2008.
But the lender prefers to compare the average price for the past three months with the average price for the same period a year ago, which produces its current estimate of a 17.2% annual fall.
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