Mortgage lender Halifax revealed today that there was an average 0.6 per cent increase in property prices last month – a neat reversal of the 1 per cent price drop recorded in December 2011.

Figures published by the Halifax showed a 1.8 per cent drop in house prices between November 2011 and January this year – bringing an average house’s price back up to £160,907.

Consumer spending in the UK was heavily driven by the domestic property market, but the credit crunch and subsequent economic crisis put paid to that, causing the market to stall and prices to waver.

Commenting on the figures, Halifax housing economist Martin Ellis told news agency Reuters that “the continuing very low level of interest rates has helped to support housing demand, resulting in little overall movement in house prices since last spring.”

“Low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years. A recent improvement in employment trends may also have supported demand,” he went on to explain.

Mr Ellis noted that this year, economic growth is still predicted to be patchy, while household incomes will be squeezed and mortgage lending will be more rigorous in its assessments. However despite these strictures, he believes that property prices will remain fairly constant, unless there is a further economic downturn.

“Prospects for house prices over the coming months will, to a large extent, depend on events in the euro zone and the repercussions of developments there for the UK economy,” he said.

“If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012.”

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