2005 house price growth lowest in a decade: Halifax

2005 house price growth lowest in a decade: Halifax

	Published : Mon, 09 Jan 2006 14:35 By : Amy Watts Print this Story

LONDON - House prices were up by 5 percent at the end of last year, as December saw a 1 percent increase. But these figures were still the lowest in a decade, according to Britain's biggest mortgage lender, the Halifax.

The bank had predicted that the house prices would decline by about 2 percent in the year and although this was thankfully averted, it is still not all roses for the property markets. The rise in December was identical to that of November and helped push the house price growth above the 5 percent mark, but this was still below the long term average of 8 percent.

The Halifax therefore said that house prices had seen a "modest recovery" in 2005. The average price of a home in the UK was recorded to be £171,632.

The annual rate of inflation however slipped in all regions except London, which recorded an increase of 6.7 percent as against the 3.9 percent at the same time in 2004. Prices in Scotland spiraled by 14.8 percent, while Northern Ireland recorded an increase of 14.1 percent. The north of England with a 9.1 percent gain came in next followed by Yorkshire, where prices rose by 8.4 percent.

"An increase in total employment of 326,000 over the past year and August's interest rate cut, which has helped to keep mortgage payments close to the long-term average as a percentage of a new borrower's income, have underpinned the recent improvement in house prices," said Martin Ellis, chief economist at Halifax.

Prices in East Anglia fell by 1 percent, while the south west recorded a 1.9 percent drop. The average price of a home in London was £257,120 in December, while it was £113,169 in Scotland. Halifax has predicted a 3 percent growth this year, "Another year of below trend economic growth and the continuing high level of house prices in relation to earnings, however, should curb housing demand and prevent a renewed bout of high house price increases in 2006," Mr Ellis said.

These figures are marginally better than what Nationwide has projected. Howard Archer, chief UK economist at Global Insight said that though both Halifax and Nationwide painted contrasting pictures, "it is clear that there was some firming in house prices in the latter months of 2005 amid a marked pick up in market activity and buyer interest."