House prices in Britain rose for a sixth consecutive month in December, increasingly by 1 per cent to bring their total rise since April's low to 9.4 per cent, mortgage lender Halifax said today.
December's rise followed a revised 1.3 per cent gain the previous month and means the average property ended the year 5.6 per cent higher than they started it.
The recovery in Britain's housing market has surprised many commentators who predicted that the double-digit declines of 2008 would be repeated.
But Halifax stuck with its forecast that prices would flatline over the course of 2010. It said the recovery had been aided by low levels of supply, and it was uncertain that this would continue.
"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," it said.
Prices in the last three months of 2009 were 3.5 per cent higher than in the third quarter - the biggest quarterly increase since the final quarter of 2006. Compared to the final quarter a year ago, prices were 1.1 per cent higher, marking the first rise on this measure since March 2008.
The Bank of England has held interest rates at a record low of 0.5 per cent since last March and is not expected to raise them until the second half of 2010.
George Buckley, chief UK economist at Deutsche Bank, said an average of house price indices published by Halifax and the Nationwide showed British house prices have been rising at an average annualised rate of 12.5 per cent over the past six months.
But he too cautioned that the pace of recent gains was unlikely to continue for long.
"A key reason affordability currently looks good is that interest rates are so low," he said. "If the BoE begins raising rates from August, then house price growth may well come to an end."
Reuters