House prices remain the same in January

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by Kay Murchie

Figures from the Halifax have revealed that house prices in January were unchanged with the average cost of a home at £197,244.

House prices peaked last summer when Halifax reported 11.4% annualised growth over the 3 months to August 2007. Halifax now puts the annual rate of house price inflation at 4.5% while Nationwide puts it at 4.2% - the lowest level since December 2005.

While property price growth has slipped quite considerably, figures from the Halifax and the Nationwide suggest that the property market is showing resilience. Martin Ellis, Halifax chief economist, said the bank still believed UK property prices would remain unchanged throughout this year.

Howard Archer, chief UK economist at analysts Global Insight, added the data from the Halifax and Nationwide suggest that, while house prices are cooling considerably, they are not plunging through the floor.

Mr Archer added that the property market is clearly buckling under severe pressure from increased affordability problems and the tightening of lending criteria.

It is now widely expected that the Bank of England will cut interest rates tomorrow due to the fact that house prices remained unchanged last month. Still-significant inflationary pressures are limiting the scope for aggressive Bank of England action tomorrow concluded Mr Archer.