House sales highest in 5 years, says Halifax

Housing market activity rose to the highest levels in five-years, according to the latest Halifax house price index. Sales increased by 5% in 2012 to reach 932,000 – the highest annual total since 2007 when the figure was over 1.6m. House prices in the three months to January were up 1.9% compared with the preceding three months, representing the biggest rise since January 2010. Approvals for purchase increased by 3 per cent to 55,800 in December.

Halifax housing economist Martin Ellis says: “The signs of improvement in the housing market towards the end of last year continued in January. Prices in the three months to January were 1.9% higher than in the previous three months; the strongest figure in this measure of the underlying trend for three years. Prices were also 1.3% higher than in the same period a year ago, marking the first annual rise for 27 months.

“Market activity has also improved with sales in 2012 at their highest for five years. Rising mortgage approval numbers point to further increases in home sales in the coming months. The Funding for Lending scheme has helped lenders to lower interest rates and improve availability in the past few months. This is likely to have been a factor contributing to the pick-up in both home sales and prices.”

Looking ahead, Ellis says household finances are expected to remain under pressure against a weaker economic backdrop, but that house prices should remain stable in 2013.