The property market bounced back at the end of 2004 with a 1.1% increase in prices for December, according to the latest figures from the Halifax.
However, the market showed its poorest performance during the final quarter of last year since the second quarter of 2002, the mortgage lender said. Prices rose by just 0.1% between October and December 2004.
The second half of 2004 contrasted remarkably with the first half, according to the Halifax, thanks to the five interest rate rises between November 2003 and August 2004, combined with the growing difficulties faced by first time buyers. Prices increased by 2.8% between July and December, following a rise of 11.9% over the preceding six months.
As the market continues to show strong signs of a slowdown, the Halifax believes interest rates have peaked at their current rate of 4.75%, and will end the year half a percentage point lower at 4.25%.
The annual price rise of 15.1% last year was the smallest since 2001, according to the figures, and there was a clear north-south divide over 2004, with price rises in the north far outstripping those in the south throughout the year. London?s average price rise of 4% made it the worst performing region, and last year was the capital?s slowest since 1995.
Market activity seems to be trailing off, with Bank of England figures showing massive falls in mortgage approvals. However, Halifax?s Chief Economist, Martin Ellis, remains optimistic: ?Sound market fundamentals will continue to underpin the market in 2005, ensuring that the market remains healthy and that house prices will fall only slightly. We expect a 2% decline in prices nationally this year,? he said.