Halifax: House prices rise for seventh month in row

02/04/2010 (4 h 16 m ago)

Halifax figures show a 0.6% rise in house prices in January, but the rate of increase is smaller than in previous months House prices rose by 0.6% in January, the seventh monthly increase in a row, according to figures published by the Halifax today. Although the rise takes the average house price to 9.9% above last April's trough, and prices were up by 3.6% over the past 12 months (the comparable rate last January was -17.2%), Halifax said it was smaller than any of the previous six increases. The bank said the "marked reduction" in interest rates during the past 15 months had boosted housing demand from those with big enough deposits to enter the market. Its figures show that nationally, typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in the third quarter of 2007 to 32% in the fourth quarter of last year. Increased demand has combined with a small supply of properties for sale to push prices up by an average of £15,287 to £167,777. But Martin Ellis, housing economist for Halifax, said: "There are some signs that more people are putting their homes on the market. "A further increase in the supply of property is possible over the coming months, which would help to curb upward pressure on prices. Overall, our current view is that house prices will be flat during 2010." The number of homes coming on to the market increased for the seventh successive month in December, according to the Royal Institution of Chartered Surveyors , while figures published last week by the Land Registry showed that house sales in England and Wales in October were 34% higher than a year earlier. Halifax's figures, although slightly lower, support house price statistics published by Nationwide building society last week. It said prices rose by 1.2% in January to an average of £163,481. Sceptical forecasts Nationwide's chief economist, Martin Gahbauer, also predicted a slow down in the rate of increase, saying that low earnings growth, a reduction in employee work hours and low inflation were likely to limit "the upside potential for the current recovery in house prices". Howard Archer, chief UK economist at IHS Global Insight , goes further, predicting a small fall in house prices during 2010. "We are sceptical that the marked rises in house prices seen since early 2009 can be sustained given a still far from favourable economic environment and still relatively tight credit conditions," he said. "We believe that a modest relapse in house prices is likely at some point in 2010, and they may well be essentially flat over the year as a whole. A relapse in house prices is even more likely to occur if more properties come on to the market as a result of the recent firming in prices, given that a shortage of properties has been a key factor supporting house prices since early 2009." He added that Bank of England data show that mortgage approvals dipped in December , and at 59,023 were well below the average 92,400 a month seen between 1993 and 2009. "It is considered that under normal supply conditions, monthly mortgage approvals of 70,000-80,000 are consistent with stable house prices," Archer said. House prices Property Housing market Jill Insley guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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