Halifax House Price Index - January 2012

House price growth remains weak on an underlying basis, despite prices rising by 0.6% in January, according to the latest Halifax House Price Index.

Commenting, Martin Ellis, Housing Economist, said:

"House prices in the three months to January were 0.9% lower than in the previous three months. Despite the slight downward movement in the underlying trend, prices increased by 0.6% in January.

"Notwithstanding monthly fluctuations, the average UK house price is very close to where it was eight months' ago, at around £161,000. 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. 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.

"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."

Key facts

• House prices in the three months to January were 0.9% lower than in the preceding three months. This was the fourth consecutive month that this measure of the underlying trend has been slightly negative.
• On a monthly basis, house prices increased by 0.6% in January. This was the second rise in the past six months and the first since October.
• Prices in the three months to January were 1.8% lower than in the same period a year earlier. This measure of the annual rate has edged lower in the last two months from -1.0% in November, but is still comfortably above the recent low point of -4.2% in May 2011.
• Overall, house prices have changed little in the past eight months. The UK average price in January, at £160,907, was very similar to that in May 2011 (£161,039).

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