House prices in slim rise
House prices rose by 0.6 per cent in January figures from mortgage lender Halifax showed helping to recover some lost ground.
House prices fell by 1.8 per cent in the three months to January compared with a year ago, taking the average price of a home to 160,907 pounds.
“The continuing very low level of interest rates has helped to support housing demand, resulting in little overall movement in house prices since last spring,” said Halifax housing economist Martin Ellis.
“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. A recent improvement in employment trends may also have supported demand,” he added.
Once a big driver of consumer spending, the property market has faltered since the start of the financial crisis.
Many economists expect weak economic growth, squeezed household finances and tight mortgage lending to weigh on housing market demand throughout 2012, though Ellis said house prices should hold steady this year, barring another downturn.
“Prospects for house prices over the coming months will, to a large extent, depend on events in the euro zone 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,” Ellis said.