House prices were static in January but there are continuing signs of weakness in housing market activity according to Halifax.
It says that prices in the three months to January were 1.0 per cent lower than in the previous quarter. This was the third successive fall in house prices on this basis.
House prices in January were 4.5 per cent higher than a year earlier. The average price of a home in the UK has increased by £7,628 over the past year to £197,244.
Halifax says there are continuing signs of weakness in housing market activity. The number of mortgage approvals to fund house purchase in the final three months of 2007 was 35 per cent lower than during the same period a year earlier.
The lender believes that house prices will be flat in 2008. It says that sound economic fundamentals will support house prices in 2008.
It points out that the Bank of England is likely to cut interest rates again over the coming months with a reduction probable this month.
Halifax chief economist Martin Ellis says: ‘House prices were unchanged in January. Prices in the three months to January were 1.0 per cent lower than in the previous quarter. Over the past year, the average price of a home in the UK has increased by £7,628 to £197,244.
“We expect sound economic fundamentals and lower interest rates to support house prices. Nationally, we predict that house prices will be flat in 2008. The UK economy recorded its 62nd successive quarter of growth in 2007 Quarter 4, extending the longest running period of unbroken growth on record. The economy is expected to continue expanding during 2008, albeit at a slower pace than in the past two years. Sustained growth should support a strong labour market. The MPC is likely to cut the Bank Rate at least twice in 2008; further supporting both the economy and housing demand.’