House prices increased by 1.9% in January, offsetting December’s 1.6% decline although this may not signal a complete end to the falls, says the latest Halifax house price report.

This brings the year-on-year figure to -17.2% with the three month-on-three-month figures registering a fall of 5.1%. ‘Historically, house prices have not moved in the same direction month after month even during a pronounced downturn,’ points out the report. ‘For example, prices fell for seven months successively in 1989 before increasing in three of the first ten months of 1990 even though the overall trend in prices was downwards.’

Despite this gloomy caveat, Halifax also points out that there are signs of an increase in activity albeit at a low level as mortgage approvals increased in December, and lower interest rates are also improving affordability.

‘There are some very early signs that the market may be stabilising albeit at quite a low level,’ said chief economist at Halifax, Martin Ellis. ‘Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market.’

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