Halifax index shows surprise 1.1% rise in house prices
The housing market had a surprise 1.1 per cent rebound in prices in December, defying expectations of a decline spurred by mounting evidence of a cooling market.
The housing market had a surprise 1.1 per cent rebound in prices in December, defying expectations of a decline spurred by mounting evidence of a cooling market.
The monthly gain was the biggest since September and came after two months of falls, according to Halifax, Britain's largest mortgage lender.
However, the annual growth rate in house prices slipped to 15.1 per cent in the three months to December, the lowest in more than a year. Last year as a whole, prices rose 15.1 per cent compared with 15.4 per cent in 2003 and 26.4 per cent in 2002.
Halifax stressed that prices in the final quarter of last year were only 0.1 per cent higher than in the previous quarter - the smallest quarterly gain since the middle of 2000. Economists said the monthly data tended to be volatile and that December's rebound did not alter the view that the housing market was slowing, suggesting that interest rates would remain at 4.75 per cent for months to come.
Ed Stansfield, a property market analyst at Capital Economics, said: "We suspect that December's rise will be reversed in the coming months. House price falls, not rises, will be the dominant story of 2005."
The Halifax figures indicate the housing market is slowing at a measured pace, defying doom mongers' predictions of a crash. Nick Kounis, at Fortis Bank, said the monthly price increase left the index at about the same level as last July, suggesting the trend for house prices was flat rather than downward. "The report adds to evidence suggesting that up to now we are seeing a soft landing for the housing market," he said.
Halifax expects a fairly modest 2 per cent decline in house prices this year. However, some economists have said there could be sharper falls in the months ahead if the recent weakness in the number of mortgage approvals - a lead indicator for the housing market - continues. Approvals hit a nine-year low in November and the volume of loans fell to the lowest since mid-2002, according to the Bank of England.
Meanwhile, a survey by NTC Research and Deloitte showed the number of people placed in permanent jobs last month rose at the slowest pace since the summer of 2003, due to skill shortages, which also pushed up pay rates in December.
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