Halifax warns of house prices slip despite surprise leap

Lender Halifax warned of a “subdued” housing market this year despite its latest index showing a surprise December boost.

The 2.2% jump in prices last month, bouncing back from a 1.2% fall in November, wrongfooted City economists following a 0.7% slide in prices shown by the Nationwide.

But experts focused on Halifax’s less volatile quarterly figures showing a 0.4% decline at the end of last year as a truer picture of market conditions. Over the year as a whole, prices rose 1.3%.

Halifax sees house price growth of between 2% and 4% this year but “still fairly subdued by modern comparison”.

Managing director Russell Galley added: “This expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.”

The housing market is operating against the backdrop of continued uncertainty sapping demand as mortgage approvals fell to their lowest for seven months. According to the latest RICS survey, new buyer enquiries have also plunged, signalling more cautious buyers.

Capital Economics property economist Hansen Lu said: “We think the weakness in house price growth will persist this year. After all, if a Brexit deal is done, the housing market would still be weighed down.”