Prices in the three months to January compared to the previous three months were however 5.1% lower.
House prices in January were 17.2% lower on an annual basis. Despite the monthly gain, the annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from 16.2% in December to 17.2%.
Lower interest rates are improving affordability. Mortgage payments have fallen from 31% of gross earnings for the average new borrower in the first half of 2008 to an estimated 21% in January.
Housing affordability has also improved according to the house price to average earnings ratio, which decreased to an estimated 4.48 in December 2008 from a peak of 5.84 in July 2007; a fall of 23%. The long-term average is 4.0.
Martin Ellis, economist at the Halifax, says: “There was a 1.9% increase in average UK house prices in January, offsetting December’s 1.6% decline. Prices in the three months to January compared to the preceding three months, which provides a better indicator of the underlying trend, were 5.1% lower.
“It is always important not to place too much weight on any one month’s figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.
“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.’