During December house prices fell by 0.6 per cent, which was the first monthly decline since January 2013 (-0.8 per cent), but on a quarterly basis prices rose by 1.9 per cent, according to the Halifax House Price Index.
Monthly house price movements can be volatile and the three month-on-three month change is a more reliable indicator of the underlying trend. This can be illustrated by comparing Nationwide’s monthly December figure which saw house prices increasing by 1.4 per cent but on a quarterly basis went up by 2.7 per cent.
Prices in the three months to December were 7.5 per cent higher than in the same three months a year earlier – slightly lower than in November when it was 7.7 per cent. This was fairly similar to Nationwide’s annual increase of 7.1 per cent.
Halifax said that house prices are likely to continue to rise this year, at a broadly similar pace to 2013 within the range of 4 per cent and 8 per cent.
Activity has picked up with transactions in 2013 likely to have exceeded one million for the first time since 2007. Home sales rose for the seventh successive month in November to 96,980; 24 per cent higher than in November 2012, according to the HM Revenue and Collections.
Martin Ellis, housing economist, said: “Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months. This will increase the likelihood that more people will consider buying a property in 2014, therefore supporting housing demand.
“Nonetheless, continuing pressures on household finances, as earnings again fail to keep pace with consumer price inflation, are expected to constrain demand. The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply.
“Indeed, our consumer confidence research shows that there has been a significant improvement in sentiment towards selling in recent months. These factors should help to curb the upward pressure on prices.”
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