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House prices were 1.1 per cent higher last month than they were a year ago according to the Halifax.  It is the first time that the Halifax house price index has reported positive annual house price inflation since last May. 

Prices, says the lender, have now risen for six months in a row.  They rose by 3.5 per cent in the last three months of 2009, the biggest quarterly increase since 2006.  In common with most other commentators, including GSPC, the Halifax pinpoints last April as the market's weakest month.  Since then, however, prices have recovered by almost 10 per cent.

The Halifax cites low levels of properties coming on to the market and low interest rates as key factors behind the price reversal.  But a new, and unexpected, element has been added to these core reasons.  Martin Ellis, Halifax Housing Economist, noted:  "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". 

Forecasters had earlier predicted that a worsening employment situation would push prices lower and this is the first time that the Halifax has cited employment as a trend supporting prices rather than weighing on them.

Having said all that, the Halifax forecasts no change in house prices this year, a view shared by GSPC (see GSPC House Price Data for more details).