January house price figures show a slight increase.

According to a new study conducted by the Halifax, the average price of a UK home rose by 1.9% in January compared to the 1.6% decline in December.

Despite the increase, Halifax warned in its House Price Index not to place too much weight on the results for one month as the figure does not signify a turnaround in the housing trend. 

The UK house prices for the year to January show a 17.2% decrease compared to 16.2% in December with the average house now selling for £163,966.

Commenting on the results, Martin Ellis, Housing Economist for the Halifax, said: “Prices in the three months to January compared to the preceding three months, which provides a better indicator of the underlying trend, were 5.1% lower.”

Ellis also mentioned that despite some signs of market stabilisation, the housing situation will be very challenging in the months ahead.

He said: “Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market.”

It is not all bad news however as lower interest rates are improving affordability, according to the Halifax. Mortgage payments have fallen from 31% of gross earnings for the average new borrower to an estimated 21% in January in the first half of 2008.

Subsequently, the number of mortgages approved has risen by 15% in December. Nevertheless, that number remains at a low level – 58% lower than in December 2007.

Houses are now also more affordable as the house price to average earnings ratio improves.

The Halifax House Price Index is the UK’s longest running monthly house price series, with data covering the whole country going back to January 1983.