The Halifax reports UK house prices rose by 1.9% in January, compared to December.
The average house price according to Halifax is now £163,966. Although reporting an increase for the first time in 10 months Halifax warns that one month’s figures did not indicate an end to the downward trend in prices, which it says have dropped 17.2% in the past year.
Halifax prefers to compare the average of the previous three months to the preceeding three months to give a better indicator of the underlying trend – this puts prices 5.1% lower then the previous three months.
Martin Ellis, housing economist at the Halifax, said
“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.”
However earlier this month, the Bank of England reported that the number of new mortgages approved for home buyers had picked up slightly in December.
The 31,000 mortgage approvals in December were up from 27,000 in November, a rise of 14.8%. They were however still the second lowest figure on record, down 58% on December 2007.
This increase could be due to the interest rate cuts which have helped to reduce mortgage payments for the average new borrower. Average payments have fallen from 31% of gross earnings in the first half of 2008 to an estimated 21% in January 2009. There could also be an element of a bit more confidence returning to the mortgage market which would make sense having gone through a year on year decline of 17.2%. Most lenders are still only lending 80 – 85% but there are a couple of lenders (Ipswich and Clydesdale/Yorkshire Bank) that have returned to the 95% market for first time buyers.
According to some estimates, 40% of mortgage applications in January came from first-time buyers. This has risen from just 10% in October last year. The housing market is nothing without first time buyers so with them seemingly returning, presumably feeling that prices have dropped enough but not too far to still have a good offer accepted, could this be the start of the end?
