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Thursday Feb 05, 2009

British house prices climb unexpectedly in January: survey

British house prices climb unexpectedly in January: survey

LONDON, Feb 5, 2009 (AFP) - British house prices rose unexpectedly in January from December, snapping a ten-month losing streak, but plunged at a record pace on an annual basis, home loans provider Halifax said Thursday.

Prices advanced 1.9 percent in January from the previous month, pushing up the average price of a house to 163,966 pounds (238,158 dollars, 185,082 euros), according to a survey from Halifax, which is part of British bank HBOS.

Prior to January, the group had recorded ten successive monthly falls as the British economy was slammed by recession and the global credit crunch which has tightened lending conditions.

However, Halifax added Thursday that prices in Britain tumbled by a record 17.2 percent in the three months to January, compared with a year earlier. That was the biggest 12-month drop since the series began 25 years ago.

"The Halifax completely unexpectedly and somewhat incredibly reported that house prices rose by 1.9 percent month-on-month in January," said IHS Global Insight economist Howard Archer.

"This was the first rise in house prices since January 2008, although it did not stop the annual decline in house prices widening to 17.2 percent."

The news came just hours before the Bank of England was widely forecast to cut British interest rates by half a percentage point to a fresh record low of 1.0 percent in a bid to combat the recession. A decision is due at 1200 GMT.

The Halifax meanwhile cautioned against reading too much into the monthly data.

"It is always important not to place too much weight on any one month's figures," said Halifax housing economist Martin Ellis.

"Historically, house prices have not moved in the same direction month after month even during a pronounced downturn.

"There are some very early signs that market activity may be stabilising, albeit at quite a low level."

He added: "Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the 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."

rfj/nh - AFP

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