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Surprise lift for January house prices
By Rebecca Atkinson
House prices lifted by a surprise 1.9% in January - registering their first rise for 11 months, according to Halifax.
The increase in prices, which takes the value of the average home to £163,966, follows a 1.6% fall in December.
But Halifax warns that the problems in the housing market are far from over with prices are still more than 17% lower than this time last year. Nationwide's monthly house price index recently revealed a 1.3% fall in prices last month.
Martin Ellis, housing economist at Halifax, says people shouldn't put too much weight on January's rise. Over the three months to January 2009 prices still fell 5.1% and, historically, house prices have not moved in the same direction month-after-month even during a pronounced downturn.
For example, Ellis says that prices fell for seven successive months in 1989 but subsequently increased in three of the first 10 months in 1990.
He adds: 'There are some very early signs that market activity may be stabilising, albeit at quite a low level. Nonetheless, 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."
Enquiries from potential homebuyers may be on the rise, but Howard Archer of IHS Global Insight warns that recession, sharply rising unemployment, waning income growth, ongoing very tight credit conditions and an unwillingness to commit to buying a house when the economic outlook and job prospects look so bad mean further falls are likely.
He says: 'While there are some indications from the latest mortgage data and surveys that housing market activity may be bottoming out, this is at an exceptionally low level and there continue to be a powerful set of negative factors that seem highly likely to depress activity and prices for some time to come.'
He expects a further 15% fall in house prices over the course of the year followed by a 5% reduction in the first half of 2010 to take prices 35% lower than their August 2007 peak.
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