Halifax announces surprise rise in house prices

The Halifax have announced that UK house prices rose by 1.1% in December, in spite of recent evidence which showed that the housing market in the UK is slowing down.

The report concluded that there were "continuing signs of a genuine slowdown in the housing market". The Halifax stated that house prices in the final quarter of 2004 were only 0.1% higher than the previous quarter - the smallest quarterly gain since September – which, the company said, provided further evidence that house price inflation is slowing.

The report also stated that house prices had increased by 15.1% in 2004, but by only 2.8% in the second half, representing the smallest annual rise since 2001.

House prices had risen fastest in the North of England during the fourth quarter, with prices rising by 3% in the North West, 1.2% in Yorkshire and the Humber and 0.7% in the North. However although prices in this area had increased rapidly during 2004 as a whole, the Halifax said, there had been significant slowing in house price inflation in the second half of the year, as first-time buyers began to experience the same problems as those in the south, in buying a home.

The biggest decline in house prices was in Wales with a 6.2% drop and the South East with 1.6%.

The bank reported that the average price of a house in the UK now stood at £162,086, with London still the most expensive region, with an average house price of £241,670. Scotland is now the only region in the UK where the average house price remains under £100,000 (£99,056).

Commenting on the report, the Halifax's Chief Economist, said: "Sound housing market fundamentals will continue to underpin the market in 2005, ensuring that the market remains healthy and that house prices fall only slightly."

He added: "We expect a 2% decline in prices nationally this year with the market subsequently characterised by modest price increases and a steady improvement in transactions beyond 2005."

(KMcA/SP)