The outlook for house prices remains weak

Commenting, Martin Ellis, Halifax’s housing economist, said: "Notwithstanding monthly fluctuations, the average UK house price is very close to where it was eight months' ago, at around £161,000.

“The continuing very low level of interest rates has helped to support housing demand, resulting in little overall movement in house prices since last spring.

“Low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years. A recent improvement in employment trends may also have supported demand.

"Prospects for house prices over the coming months will, to a large extent, depend on events in the eurozone and the repercussions of developments there for the UK economy. If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012."

Halifax data shows house prices in the three months to January were 0.9% lower than in the preceding three months. This was the fourth consecutive month that this measure of the underlying trend has been slightly negative. Prices in the three months to January 2011 were 1.8% lower.

Overall, house prices have changed little in the past eight months. The UK average price in January, at £160,907, was very similar to that in May 2011 (£161,039).

Tracy Kellett, managing director of UK buying agent, BDI Home Finders, said: "The quarterly change of -0.9% is a more accurate description of where the market is at than January's 0.6% rise.

"The lack of transactions and activity generally can easily exaggerate an individual month's figures.

"House prices are being held artificially high by two key factors - an extreme lack of stock and historically low interest rates.

"Throughout 2012, we're likely to see a further widening of the North/South divide. Prices will be hit hardest where the economy is feeling it the hardest.

"The denouement of the debt crisis in the eurozone will naturally impact house prices here in the UK.

"With house prices, confidence is everything.

"Buyers remain deeply cautious, while sellers won't sell unless they really have to. Recreational home-moving is almost a thing of the past.

"What will happen to prices when rates go up? They could fall sharper and faster than many people think.

"Bizarre as it may seem, now may be a better time to sell than in two years' time when rates are cycling up.

"Unfortunately, there's an entrenched belief among homeowners that if they stick in there for a year or two, house prices will rise. In the short to medium term, I can't see that happening.

"All bar the very best properties will be worth less in 2014 than they are now.

"Prime London, as ever, will remain a law unto itself, propped up by overseas demand."

Capital Economics also believes that house prices will drop this year: “The latest rise in the Halifax House Price Index does little to detract from the underlying downward trend on this measure.

“And given rising unemployment and the fact that valuation metrics suggest that house prices remain unsustainably high, a moderate decline in house prices throughout 2012 seems likely.”