House prices up 1.1% on an annual basis
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Prices in December were 1.1% higher on an annual basis, marking the first rise since March 2008, shows the latest Halifax House Price Index.
Prices increased for the sixth successive month with December’s rise slightly below the average for the preceding five months - 1.2%.
Prices in the final three months of 2009 were 3.5% higher than in Q3. This is the biggest quarterly increase since 2006 Q4 - 4.2%.
Prices have increased by 9.4% since reaching a low in April 2009; an increase in the average price of £14,552 over this period. This follows a decline of 23% between August 2007 and April 2009. The average house price is now £169,042.
House prices in December were 1.1% higher on an annual basis. This is the first increase in the annual rate of change - measured by the average for the latest three months against the same period a year earlier - since March 2008. The annual rate has turned around markedly from a low of -17.7% in April.
Low mortgage rates have reduced the burden of servicing mortgage debt. Monthly repayments accounted for an estimated 23% of average gross household income in December 2009 for existing mortgage borrowers.
The proportion of income devoted to mortgage repayments over the past few months has been the lowest since 2005 and compares with a peak of 27% in October 2008. This improvement in affordability has also helped to boost housing demand.
Martin Ellis, housing economist at Halifax, says: “House prices increased for the sixth consecutive month in December. The 1.0% rise between November and December was slightly below the average increase over the previous five months. Prices increased for the second successive quarter following falls in both the first two quarters of 2009.
“Prices in December were 1.1% higher on an annual basis, marking the first rise since March 2008. House prices have risen by 9.4% since reaching a low in April 2009.
“The significant cut in interest rates following the worldwide financial upheaval in the autumn of 2008 has markedly reduced the burden of servicing a mortgage for many households. This has helped to stimulate housing demand, albeit from a low base.
“The recent improvement in the labour market, highlighted by increasing numbers of people in employment in both September and October, has also supported housing demand.
“The prospects for the market this year will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale. Overall, our current view is that house prices will be flat during 2010.”
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