House prices "unchanged" last month

05-Feb-2008

A flat outlook is predicted for 2008 after house prices were unchanged in January, it has emerged.

The Halifax House Price Index revealed that the average house price in the UK is currently £197.244, up 4.5 per cent on last year.

Market growth will be slower in 2008 compared to the last two years but house prices should be supported by the Bank of England's likely move to cut interest rates at least twice this year, suggested Martin Ellis, chief economist at the bank.

Strong employment figures have served as a key driver of housing demand, the bank noted.

"We expect sound economic fundamentals and lower interest rates to support house prices … The economy is expected to continue expanding during 2008, albeit at a slower pace than in the past two years," Mr Ellis said.

An interest rate cut of 25 basis points is widely expected to be instigated by the Bank's monetary policy committee on Thursday.

Global Insight UK economist Howard Archer recently suggested that only a sharp fall in equity prices or last minute data suggesting a deterioration in UK economic growth would have prompted a 0.5 per cent reduction from the current base rate of 5.5 per cent.

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