House prices up 2.3 per cent

House prices in England and Wales rose at the slowest annual pace since mid-2006 this month as the average time it takes to sell a property reached a seven-year high, a survey showed yesterday.

Housing market research company Hometrack said house prices rose 2.3 per cent on a year ago in January, down from three per cent last month and the weakest rate since June 2006.

On the month, prices fell 0.3 per cent, the fourth consecutive monthly fall. The figures are not adjusted to take seasonal factors into account.

The survey adds to a growing body of evidence showing the once red-hot housing market is cooling fast as past interest rate rises and the global credit crisis deter buyers.

"Weak confidence among would-be purchasers continues to put downward pressure on house prices although the scale of the recent falls is relatively small when put in the context of gains over the last few years," said Richard Donnell, Hometrack's Director of Research.

"The short term outlook for market activity hinges as much around the outlook for UK interest rates as it does the outlook for financial markets."

The Bank of England cut interest rates in December to 5.5 per cent after a series of rate rises and is widely expected to lower borrowing costs again next month.

However, policymakers have warned inflation risks will make it tricky to judge just how to manage monetary policy as the economy slows.

Mr Hometrack said the average time it takes to sell a home rose to 8.5 weeks from 8.3 weeks - the longest period since the survey began in 2001.