January 07, 2010 |
|British house prices ended the year 1.1 per cent higher, according to figures from Halifax, the mortgage lender, marking the first annual rise since March 2008. |
Halifax measures its annual rate of change by taking an average for the latest three months.
On a month-by-month basis, prices rose by 1 per cent — the six consecutive monthly rise — which brings the average house price to £169,042.
The figures show that prices have picked up steadily in recent months, having risen by 9.4 per cent from the trough of April 2009.
Halifax noted that the cut in interest rates had significantly reduced the cost of servicing a mortgage for many households. Recent improvements in employment figures had also supported housing demand, it said.
The Monetary Policy Committee will announce at midday today whether it has decided to raise interest rates. It is expected to keep them at their current historic low of 0.5 per cent.
Despite the rises, Halifax, now part of Lloyds Banking Group, gave a cautious outlook for the year ahead, warning that it expected house prices to remain flat during 2010.
Martin Ellis, a housing economist at Halifax, said that higher demand combined with low supply had helped push up house prices. If new sellers were to flood the marketplace, this would have a dampening effect on prices.
Mr Ellis added: "The prospects for the market this year will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale."
The Halifax index contrasts with figures release by the Nationwide last week, which showed house prices rising by just 0.4 per cent month-on-month in December, the smallest rise for eight months. However, the Nationwide reported a greater year-on-year increase in house prices than Halifax, up 5.9 per cent compared with 2008.
Howard Archer, chief UK and European economist of IHS Global Insight, said that he remained sceptical about the house price rally seen in 2009, adding that prices would be prone to "modest relapses" throughout the year.
"Indeed, we believe house prices could well fall by around 5 per cent over 2010 as a whole. Much will clearly depend on whether the economy can develop the recovery after the highly probable return to growth in the fourth quarter of 2009, how much further unemployment rises, how much earnings rise, how quickly and to what extent credit conditions ease, and how many properties come on to the market over the coming months."
Earlier this week, the Bank of England said that UK mortgage approvals climbed in November to the highest level since March 2008, adding to hopes of recovery.