But on a quarterly basis price are up, some 1.9% higher in the three months to the end of January compared with the previous three months, and 1.3% higher than the same quarter a year ago. This was the first annual rise since October 2010.
This was the second successive quarterly rise and the biggest since January 2010 when the quarterly increased was 2.9%. The quarterly measure is generally regarded as giving a better indication of overall trends.
The Halifax said that its index shows the highest activity level for five years. Home sales increased by 5% in 2012 to 932,000, the highest annual total since 2007. Also sales in the final three months of 2012 were 4% higher than in the preceding quarter on a seasonally adjusted basis.
Halifax housing economist Martin Ellis said that a further rise in mortgage approvals points to continuing increase in sales. The industry wide number of mortgages approved to finance house purchases rose for the fifth successive month in December.
Approvals for purchase, a leading indicator of completed house sales, increased by 3% to 55,800 in December. Overall, there was a 19% increase in approvals over the last five months of 2012.
‘The signs of improvement in the housing market towards the end of last year continued in January. Prices in the three months to January were 1.9% higher than in the previous three months; the strongest figure in this measure of the underlying trend for three years. Prices were also 1.3% higher than in the same period a year ago, marking the first annual rise for 27 months,’ explained Ellis.
‘Market activity has also improved with sales in 2012 at their highest for five years. Rising mortgage approval numbers point to further increases in home sales in the coming months. The Funding for Lending scheme has helped lenders to lower interest rates and improve availability in the past few months. This is likely to have been a factor contributing to the pick-up in both home sales and prices,’ he added.
But he pointed out that the outlook for the UK economy and house prices is more unclear than usual. ‘Subdued economic growth and pressures on household finances are expected to constrain housing demand. Overall, we expect continuing broad stability in house prices nationally in 2013,’ he said.
The figures should result in increased optimism for prospective home buyers, according to Peter Rollings, chief executive officer of estate agent Marsh & Parsons. ‘Credit conditions look to be easing as the impact of Funding For Lending scheme hits home, and the most encouraging fact of all is that it is finally starting push up first time buyer numbers. If this trend continues, we should see an increasing number of buyers able to enter the market and drive national house price growth from the bottom up,’ he said.
‘All the signs are there that London’s market will see an even stronger spring. Strengthened domestic buyer demand has been supplemented by increased interest from Europe in the last month following the Euro’s climb against the pound, and as a result we’ve seen buyer numbers up by 9% compared to the same time as last year. This will feed through into enhanced competition in coming months, boosting sales prices and transactions in prime London in the first half of the year,’ he added.
