Price rise fails to lift house market gloom

A surprise bounce-back for property prices in January did little to dispel worries over prospects for the housing market today.

The monthly 0.8% rise shown by Halifax's latest index takes the average home's cost to £164,173, but prices are still down 2.4% year on year and the less volatile three-monthly measure showed a 0.7% decline. Building society Nationwide's index showed a 0.1% fall last month.

Halifax chief economist Martin Ellis expects "limited movement" on property this year, but warned that nerves over the economy and tumbling confidence posed risks to the market.

The one silver lining is that recent falls have also made sellers more reluctant to put their homes on the market, which should ease the downward pressure on prices.

IHS Global Insight's Howard Archer said: "We believe that the fundamentals remain largely unfavourable for the housing market, even though signs that fewer houses are now coming on to the market could provide significant support for house prices if sustained."