Scepticism over house price rise

Reports of a December rise in house prices from Britain's leading mortgage lender were greeted with scepticism yesterday by estate agents and City economists.

The Halifax said strong market conditions in the north resulted in a 1.1% increase in prices last month following falls in both October and November.

Despite the gain, the Halifax data revealed a sharp slowdown in house price inflation during 2004, and the lender said it expected the cost of property to fall by 2% in 2005.

Halifax chief economist Martin Ellis said: "Sound housing market fundamentals will continue to underpin the market in 2005, ensuring that ... house prices fall only slightly."

Russell Jervis, managing director of Haart estate agents, expressed surprise at news of higher prices. "Halifax's figures for December bear little resemblance to the market at the end of last year. Four interest rate rises during 2004 and scaremongering about the state of the market combined to create anxiety for buyers and sellers," he said.

December's increase meant prices rose by 0.1% in the fourth quarter of 2004, the Halifax said. This compared with an increase of 2.8% in the third quarter and 6.1% in the second.