HOUSE prices rose in January, defying the trend of recent months, Halifax said yesterday, as it warned that values are set to stagnate this year.
Average prices increased 0.6 per cent to £160,907, though they fell 0.9 per cent over the quarter and are down 1.8 per cent since January 2011.
“Low interest rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years,” said Halifax economist Martin Ellis.
Mortgage payments for first-time buyers and for movers stood at 27 per cent of disposable earnings in the fourth quarter of 2011, well below the 37 per cent average recorded over the past 27 years and almost 50 per cent down on the 48 per cent peak seen in 2007.
“A recent improvement in employment trends may also have supported demand,” said Ellis, though other economists point to the simultaneous rise in unemployment as a factor pushing prices down.
Halifax expects prices will stagnate throughout 2012, though if the Eurozone crisis drags the UK into recession, they may sink further.
