House prices have increased by nearly two per cent in the past month according to the latest Halifax Price Index.
"There was a 1.9% increase in average UK house prices in January, offsetting December's 1.6% decline," said Halifax housing expert Martin Ellis, who said the results signify "some very early signs that market activity may be stabilising, albeit at quite a low level.".
However, Halifax was quick to point out that it is important "not to place too much weight on any one month’s figures," and that the housing market will remain difficult throughout the coming year.
"Prices in the three months to January compared to the preceding three months, which provides a better indicator of the underlying trend, were 5.1% lower," said Mr Ellis.
"Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage
finance are expected to mean that 2009 will be a difficult year for the housing market," he said.
Despite the small rise, house prices in January were 17.2 per cent lower than a year ago, and the average house in the UK now costs £163,966 – this is up from £160,861last month but down £32,278 from January 2008’s average of £196,244.
The good news though, says Halifax, is that lower house prices and lower interest rates
are improving affordability.
Mortgage payments have fallen from 31 per cent of gross earnings for the average new borrower in the first half of 2008 to an estimated 21 per cent in January 2009 while the house price to average earnings ratio has decreased by around 23 per cent from the summer of 2007.
Howard Archer, chief UK economist at IHS Global Insight, said the figures were incredible, but said the "very unexpected spike up" would not fundamentally change his belief that further significant falls are highly likely in 2009.
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