The cooler market forecast for January has not arrived, much to the surprise of property experts. According to the latest Halifax market survey exactly the opposite has happened ? prices rose by 1.3% last month, more than compensating for December’s unexpected 0.9% drop.

As property agents across the country prepare to enter the market’s busiest season, annual house price inflation remains steady at 9.9% and a shortage of supply is ensuring the number of buyer enquiries is also strong.

But Halifax believes the fluctuating house price inflation witnessed over the last two months still indicates a cooling house market. ‘The mixed pattern of monthly price rises and falls in December and January is consistent with a slowing market,’ commented Martin Ellis, chief economist for Halifax.

The full effects of the recent interest rate rises have still not been felt, according to property experts. ‘Given the lags in the home buying process, we are unlikely to have seen the full impact of recent interest rate rises on the market,’ said Ed Stansfield from Capital Economics.

Halifax predicts softer figures for the duration of 2007. ‘The recent increases in interest rates are also expected to put downward pressure on investment and consumer spending growth which, together with an easing in global economic growth, is likely to result in a modest easing in the pace of UK activity during 2007,’ said Mr Ellis.