January house prices up 1.3 percent

Halifax reported that prices rose by 1.3% in January, keeping the annual rate of house price inflation at about 10%.

According to the Halifax, the average house price is now £188,623.

Meanwhile, the Land Registry said that houses prices in England and Wales fell slightly in the final quarter of 2006 however over the year the prices have risen by 8.5%.

Halifax has repeated its assertion that the market will cool during the course of 2007.

Martin Ellis, chief economist at the Halifax, points to a number of factors providing a brake on housing demand.

"Negative real average earnings growth for only the second time in over 10 years, combined with higher interest rates and slower economic growth will squeeze householders' finances, causing potential homebuyers to be more cautious and constraining housing demand.

Accordingly, we predict that annual house price inflation will ease from 10% to 4% by the end of 2007," Mr Ellis said.

In December, both new mortgage approvals and inquiries fell to levels not seen for over a year and one fo the reasons is Recent rises in UK rates may also have an impact on demand for houses.