UK house prices increased by 1.1% in December, the first monthly rise since September, the Halifax has said. The UK's biggest mortgage lender said prices rose 15.1% over the whole of 2004, but by only 2.8% in the second half of the year. The average price of a house in the UK now stands at £162,086, Halifax said. The survey seems to fly in the face of recent evidence that the UK housing market has been slowing substantially in response to interest rate rises. Last week, the Nationwide said that house prices fell 0.2% in December, with annual inflation running at a three year low. On Tuesday, figures from the Bank of England showed that the number of mortgages approved in the UK has fallen to the lowest level for nearly a decade. New loans in November fell to 77,000, from 85,000 in October, the lowest rate since September 1995, the Bank of England said. Growth in unsecured lending, such as personal loans and credit cards, also slowed last month. Capital Economics, which has in the past predicted a sharp fall in UK house prices, branded Halifax's findings a "temporary surprise," which would be reversed over the coming months. "The month by month volatility of the Halifax house price data should not distract from the fact that there is a clear downward trend in house prices," a Capital Economics statement said. Experts believe five interest rate rises since November 2003 are cutting borrowers' appetite for debt. Despite recording a price rise in December, the Halifax survey concluded that there was "continuing signs of a genuine slowdown in the housing market." Martin Ellis, Halifax chief economist, said that there was no need to revise the bank's prediction, made last month, that prices would fall by 2% in 2005. "Sound housing market fundamentals will continue to underpin the market in 2005, ensuring that the market remains healthy and that house prices fall only slightly," Mr Ellis said. If the bank's prediction of a 2% price drop comes true, it will be the first annual fall in nine years. The bank said that the recent pattern of house prices rising the fastest in the north of England continued in December. In the North West and Yorkshire and the Humber, Halifax said prices rose by 3% and 1.2% in the two regions respectively during the month. At the other send of the scale, prices in the South East and London fell by 1.6% and 0.5% respectively. The biggest decline was seen in Wales where prices fell by 6.2%, an area that had experienced strong house price growth during most of 2004. Overall, Halifax said prices in the final quarter of 2004 were 0.1% higher than in the previous quarter. This was the smallest quarterly rise since the second quarter of 2000, the bank said. As a result, annual house price inflation dipped below 20% during the final few months of 2004.
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