U.K. house prices rebounded in January after falling in the previous two months, data from the Lloyds Banking Group's Halifax division showed Monday.
Despite the slight downward movement in the underlying trend, house prices rose 0.6 percent month-on-month, reversing last month's revised 1 percent fall. The January performance marked the second growth in the past six months and the first since October.
Now the average house price is very close to where it was eight months ago, at around GBP 161,000, the report revealed. Low level of interest rates supported housing demand, resulting in little overall movement in house prices since last spring, Martin Ellis, housing economist said.
Ellis observed that low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years.
Prices in the three months to January were 1.8 percent lower than in the same period a year earlier. This annual decline has accelerated in the last two months from the 1 percent drop in November.
During three months to January, house prices fell 0.9 percent from the preceding three months. This was the fourth consecutive month that this measure of the underlying trend has been slightly negative.
Ellis expects broad stability in house prices in 2012, provided the UK avoid a prolonged recession. Moreover, prospects for house prices over the months ahead to a large extent, depend on events in the Eurozone and the repercussions of developments there for the UK economy.
Chief UK economist at IHS Global Insight, Howard Archer suspects that low wage growth, rising unemployment and persistent concerns over the economic situation and outlook will ward off potential buyers and weigh down on house prices.
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