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House Prices Show Surprise 0.5% Rise In UK

(c) Sky News 2013

House prices in Britain have risen by more than expected in January, putting a halt to their annual decline, according to Nationwide.

But the building society stressed that low numbers of first time buyers - which account for around 40% of all housing transactions - remain a "cause for concern".

The data revealed that house prices rose by 0.5% in January, and were flat when compared to January 2012 - meaning there was no decline for the first time since last February.

It takes the average house price in the UK to £162,245.

The number of first time buyers remains low - at around 20,000 a month, compared to an average of 32,000 before the financial crisis.

Despite the improved mortgage market, first-time buyers still need a deposit of around 20%, compared with 10% before the credit crunch, Nationwide said.

It described the figures as concerning, but said although the economic environment remained difficult, "there are encouraging signs" that conditions for first-time buyers are improving.

The Bank of England's efforts to boost lending will help these buyers by keeping down the cost of credit and boosting its availability, the building society said.

The scheme, launched in August, allows banks and building societies to access more than £80bn of cheap finance if they maintain or increase lending to households and businesses.

"While activity in the housing market remains muted by historic standards, there have been tentative signs of a pickup in activity in recent months," Nationwide's chief economist Robert Gardner said.

"The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pickup in lending activity.

"Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves."

The figures follow data from the Bank of England which showed that the highest number of mortgages were approved last month since January 2012.

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