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House prices end 2012 on a positive note

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House prices ended 2012 on a high with growth in the final quarter of the year, according to the latest Halifax house price index.

The lender said that house prices grew 0.6% in the three months between October and December, the first rise since May.

Prices in the final month of the year were up 1.6% on November levels, although this figure was marginally down on December 2011. Overall, there were six monthly rises and six decreases during 2012.

The average house price in the UK stood at £163,845 at the end of the year. This level represents 4.52 times the average earnings of a full time worker in the country.

Halifax said it expected house prices to remain steady during 2013. It said that ‘subdued economic growth and sustained high unemployment’ would limit demand but that low mortgage payments would ensure some stability.

Martin Ellis, housing economist at Halifax, said: “There was evidence of a firming in the housing market in the final few months of 2012. Prices in the three months from October to December were 0.6% higher than in the preceding three months. This was the first increase in this measure of the underlying trend for seven months.

“On an annual basis, prices in the final quarter of 2012 were marginally lower than in the last three months of 2011.

“We expect continuing broad stability in house prices nationally in 2013 with prices likely to end the year at levels close to where they began.”

Jonathan Samuels, CEO of Dragonfly Property Finance, added that the market was currently suffering from a lack of direction.

“I wouldn’t read too much into December’s strong showing. Flat seems to be a fairly accurate forecast for 2013 given the inconsistencies and aberrations in the economy. For every positive such as high employment, there is a negative, whether high inflation or a weak services sector.

“If we enter a triple-dip recession, which now looks possible given last week’s services sector data, that could hit consumer confidence hard and apply downward pressure to prices. The first quarter of 2013 could set the tone for the entire year.”

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