House prices are likely to remain flat during 2010 at best, although some economists predict there will be another fall in values.
According to Halifax, house prices have increased 4.2% over the first 11 months of 2009, with a 1.4% improvement in November alone.
November marks the fifth successive monthly rise in property prices and brings the average value to £167,664.
The recovery in house prices since the spring has been driven by increased demand for property, due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit, says Halifax’s housing economist Martin Ellis.
“Somewhat higher demand has combined with a low level of properties available for sale to push up prices,” he adds.
While these factors will continue to support prices in the short term, Ellis believes that house prices will remain flat during 2010, with much riding on how well the UK economy recovers from the recession and the supply of properties for sale.
However, others disagree.
“The continued rebound in house prices is hard to reconcile with the weak economic backdrop, the still-tight mortgage lending criteria and the fact that the market remains overvalued. As a result, once the shortage of property on the market eases, we suspect that house prices will fall again,” says Seema Shah, property economist at Capital Economics.