February 5, 2015 / 9:04 AM / 3 years ago

UPDATE 1-UK house prices jump unexpectedly in January - Halifax

(Adds analyst reaction, detail)

By David Milliken

LONDON, Feb 5 (Reuters) - British house prices jumped unexpectedly last month, recording their biggest rise since May 2014, but mortgage lender Halifax said it still expected the overall pace of house price rises to slow this year.

Halifax said that house prices rose 2.0 percent in January from the month before, up from a 1.1 percent increase in December and far outstripping the 0.1 percent average increase forecast in a Reuters poll.

Prices in the three months to January were 8.5 percent higher than a year earlier, compared with a 7.8 percent annual increase in the three months to December.

The figures released on Thursday contrast with most other recent housing market data, such as last month’s survey by the Royal Institution of Chartered Surveyors, which pointed to the slowest price growth since May 2013.

Britain’s housing market has slowed since the middle of last year due to tighter regulation of mortgage lending and buyers’ concerns that prices were increasing far faster than wages, though Bank of England data showed mortgage approvals picked up in December for the first time since June.

“These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market,” Halifax housing economist Martin Ellis said.

However, he added that January was also a month when house prices could be particularly volatile due to low volumes, and stuck with a forecast for house price growth to slow over 2015 as a whole.

Howard Archer, chief UK economist at consultants IHS Global Insight, also said he did not think the Halifax data pointed to a significant pick-up in the housing market.

“We have little doubt that the spike in house prices in January reported by the Halifax is an outlier,” he said. “Nevertheless we do suspect that the weakness in housing market activity may be bottoming out and we see activity picking up to a limited extent in 2015.” (Editing by Toby Chopra)

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