House Prices Rise Again - Maybe

by Ed Bowsher on 05 February 2009  |  22 comments
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A survey from Halifax suggests that house prices rose in January, but it’s probably just a blip.

The price of the average UK house rose 1.9% in January, according to the Halifax House Price Index (HPI).

At first glance, that sounds like a major piece of news, but it’s probably best not to read too much into one month’s figures.

In fact today’s press release from Halifax points out that prices don’t always move in the same direction month after month – even in a strong downturn. Back in 1989, house prices fell for seven successive months, but then rose for the first three months of 1990 before starting to fall again.

What’s more, this is only one survey that could perhaps be distorted by a few significant deals. I suspect the picture will look different when other surveys come out for January.

I think the most interesting part of Halifax’s press release is in the accompanying commentary, not the headline number.

Chief Economist, Martin Ellis says: ‘There are some very early signs that market activity may be stabilising, albeit at quite a low level,’ but then admits that ‘2009 will be a difficult year for the housing market.’

Gloomy

I’m not an estate agent so I can’t say for sure whether there are any ‘very early signs of recovery.’ But I can say that I remain gloomy.

Unemployment is on the rise and it’s still very hard for some people to get a mortgage. Until the banking system frees up, I reckon the property market will stay in the doldrums.

More: Why House Prices Will Fall This Year

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