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UK house prices rose 0.6% in January, Halifax says

Date: Monday 06 Feb 2012

UK house prices rose 0.6% in January, Halifax says

-Prospects for house prices will depend on events in the Eurozone.

-Broad stability in house prices in 2012 if UK avoids prolonged recession.




UK house prices rose by 0.6% on the month in January, according to the latest data published by mortgage lender Halifax.

The consensus estimate was for an increase of 0.1%.

In the three months to January house prices fell by 0.9% (-1.8% on the year) versus the previous three months, the fourth consecutive month during which that measure has been negative, although they remain comfortably above the recent low of -4.2% seen in May 2011.

For Martin Ellis, Housing Economist at Halifax, “(…) Notwithstanding monthly fluctuations, the average UK house price is very close to where it was eight months ago, at around £161,000. (…) Low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years (to 27% versus a 27 year average of 37% and a peak of 48% hit in quarter three of 2007). A recent improvement in employment trends may also have supported demand.

"Prospects for house prices over the coming months will, to a large extent, depend on events in the Eurozone and the repercussions of developments there for the UK economy. If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012."

To back-up its forecasts Halifax also points to recent improved trends in hiring and the slight improvement in the number of mortgages approved to finance house purchases.

Commenting on the above data economists at Barclays Capital have written the following, “(…) owing to the volatility of the monthly growth rates, the MPC looks at the 3 month/3 month average of the Nationwide and Halifax surveys. This measure reported house prices fell by 0.3% 3 month/3 month in January after falling by 0.1% in December. We expect only modest growth in house prices this year, as we expect any support provided from low interest rates and increasing household disposable income to be offset to some extent by the deteriorating labour market prospects.

AB

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