Halifax has reported a 1.9% increase in house prices in January, offsetting the 1.6% fall in December.
The bank says that although house prices are still more than 17% lower than this time last year, the last month saw the first increase in property values for 15 months.
However, Martin Ellis, housing economist at Halifax, says people shouldn’t put too much weight on January’s rise. Over the three months to January 2009 prices still fell 5.1% and, historically, house prices have not moved in the same direction month-after-month even during a pronounced downturn.
For example, Ellis says that prices fell for seven successive months in 1989 but subsequently increased in three of the first 10 months in 1990.
He adds: “There are some very early signs that market activity may be stabilising, albeit at quite a low level. 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."
The rise in prices will come as a surprise to many, especially as Nationwide recently reported that prices fell by 1.3% last month.
Some commentators believe the rise in prices could reflect increased interest in property. Online estate agents have reported a jump in traffic during January, with buyers keen to bag a bargain.
Daniel Lee, chief executive of property search engine Globrix, says: "Traffic on our website last month was more than double that of December 2008 and the number of searches increased by 71%, with most people searching at the bottom end of the price scale.”
However, with mortgage credit still restricted to people with deposits of equity of 40%, there is little indication that buyer interest will turn into house sales.