However it should be noted that prices are still down 17.2% for the last year and by about 5% for the last quarter.
Commenting, Martin Ellis, housing economist, said: "There was a 1.9% increase in average UK house prices in January, offsetting December's 1.6% decline. 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.
It is always important not to place too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.
There are some very early signs that market activity may be stabilising, albeit at quite a low level. Nonetheless, 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 worth noting:
Housing affordability has improved according to the house price to average earnings ratio, which decreased to an estimated 4.48 in December 2008 from a peak of 5.84 in July 2007; a fall of 23%. The ratio is however still above the long-term average which is 4.0.
The number of industry-wide mortgages approved to finance house purchase increased by 15% in December, to a seasonally adjusted 31,000 from a record low of 27,000 in November. Nonetheless, approvals were still at quite a low level; 58% lower than in December 2007.
The significant reductions in Bank Rate in recent months have reduced regular monthly mortgage payments for the approximately 50% of all mortgage borrowers who have tracker and variable rate products. Additionally, mortgage payments have fallen from 31% of gross earnings for a new borrower in the first half of 2008 to an estimated 21% in January.
