By AFP | Jan 7, 2010

British house prices rise 1.1 percent in 2009: survey

British house prices gained ground in 2009, a survey from home-loans provider Halifax showed Thursday, in the latest sign of an improving economic climate in recession-hit Britain.

Prices increased by 1.1 percent in December 2009, compared with the same month of the previous year, Halifax said in a statement.

The average home price rose 1.0 percent in December from November, climbing for the sixth month in a row, added the lender, which is part of the state-rescued Lloyds Banking Group.

"Prices in December were 1.1 percent higher on an annual basis, marking the first (annual) rise since March 2008," Halifax housing economist Martin Ellis said in the statement.

"House prices have risen by 9.4 percent since reaching a low in April 2009," he added.Meanwhile, with Britain stuck in a record recession, the Bank of England on Thursday held its key interest rate at 0.50 percent -- the lowest level in history -- helping keep down interest repayments on mortgages.

Ellis cited low interest rates -- which were slashed to the current level last March -- and a modest improvement in the labour market.

"The significant cut in interest rates following the worldwide financial upheaval in the autumn of 2008 has markedly reduced the burden of servicing a mortgage for many households. This has helped to stimulate housing demand."

He added: "The recent improvement in the labour market, highlighted by increasing numbers of people in employment in both September and October, has also supported housing demand."

However, Halifax also warned that the property market would struggle in 2010.

"The prospects for the market this year will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale," Ellis said.

"Overall, our current view is that house prices will be flat during 2010," he added.

The home-loans provider also revealed that the average cost of a British home stood at 169,042 pounds (268,934 dollars, 187,628 euros) in December 2009.

Last week, another major home-loans provider, Nationwide, said in a separate survey that British house prices had increased by a much larger 5.9 percent in 2009.