Halifax reports higher house prices

09 March 2006
House prices rose by 1.4 per cent in February, making up for a small drop in January, Halifax reports in its latest house price index.

However, the lender said that annual house price inflation continued to hover at around 5.5 per cent, with the average property now priced at £173,498.

Chief economist, Martin Ellis, said that this indicated "a healthy level of housing demand", which should continue through the first half of the year.

However, annual price inflation is not expected to exceed three per cent over the whole of 2006, with small price rises in the coming months forecast to be countered by a slower rate of increase in the second half of the year.

"This mixed pattern of monthly price rises and falls is a typical feature of a slowing housing market," Mr Ellis explained.

"The continuing high level of house prices in relation to earnings will curb the ability of many potential first-time buyers to enter the market," he continued.

Council tax and household bills rising above inflation will also play a part in preventing a surge in activity, Halifax said.

Separate research from the bank showed that the cost of running an owned property increased by seven per cent last year, with council tax and bills set to be the largest proportion of this cost in 2006.

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