House prices in January resulted in a decline but overall the outlook remains optimistic.  The 0.2% decline in house prices reported from mortgage lender Halifax failed to bring down the quarterly increase recorded at 1.9% to the level that would cause anything but enthusiastic hope for the months ahead.  The year to year comparison also resulted in an increase which was the first one recorded in over two years at 1.3%.

There was also an optimistic report from the Bank of England (BoE) with mortgage approvals increasing for the fifth month in a row.  The increase also resulted in an 11-month high in December of 55,785.  In a survey of lenders by the BoE, lenders reported they expect to increase their products available to mortgage borrowers in the first part of the year.  This should bring more first time buyers to the market and the housing market could see its first real boost of first time buyers in many years.

The boost in mortgage lending and property purchases is being credited to the Funding for Lending Scheme that was launched in August.  As lenders have made borrowing cheap and more available borrowers have responded with higher demand.

Martin Ellis, chief economist of Halifax, remarked, “Rising mortgage approval numbers point to further increases in home sales in the coming months.  The Funding for Lending Scheme has helped lenders to lower interest rates and improve availability in the past few months. This is likely to have been a factor contributing to the pick-up in both home sales and prices."

Mr. Ellis warned that while there is optimism the housing market recovery still remains weak.  He added, “Subdued economic growth and pressures on household finances are expected to constrain housing demand. Overall, we expect continuing broad stability in house prices nationally in 2013.”