Fool News: Shock Rise In House Prices

Mortgages and Home

Updated on 16 December 2008 | 0 Comments

House prices actually rose last month, according to the latest figures. So does this herald a market turnaround?

House prices rose unexpectedly last month, the latest industry figures suggest. However, the rise seems unlikely to signal an end to the market's slowdown.

The latest Halifax house price index, released today, revealed that house prices rose by 1.3% in December.

This means the cost of an average UK home actually jumped by over £2,500 to £197,000 -- an unexpected turnaround after three successive monthly falls.

However, analysts have been quick to point out that this is evidence of turbulence in the market rather than the precursor to sustained price growth.

Martin Ellis, chief economist at Halifax, emphasised that a mix of rises and falls is a "typical characteristic of a subdued market", and the country's largest mortgage lender predicts that house prices will be flat in 2008.

The figures painted a different picture to those recently released by Nationwide - which showed a December fall of 0.5% in the average house price.

According to Halifax, the annual increase of 5.2% made 2007 only the second year since 2001 that prices rose by less than the long-term average of 8%.

Experts are divided over whether The Bank of England's monetary policy committee will further cut the base rate at its meeting this Thursday.

Although the latest Halifax survey could be seen to weaken the case for a rush January cut, further reductions over the coming months are expected by many pundits in order to prevent anything more than a gradual economic slowdown. 

And talking of pundits, The Motley Fool's David Kuo is much more gloomy than many of his peers (including Halifax). He thinks house prices will fall 20% this year. You can find out more about his ideas at our 2012 'big idea' page.

More: Property Prices Will Be £13,000 Lower In 2012 | House Prices Double Every Seven Years

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