UK house prices rise unexpectedly in Jan-Halifax

British house prices unexpectedly jumped 1.9 percent in January, the first increase in almost a year, but were still down by a record rate on the year, the Halifax house price survey showed on Thursday.

The figures contrasted sharply with a survey by Nationwide last week which showed house prices fell 1.3 percent last month.

Mortgage approvals are also still near a record low, suggesting the housing market is nowhere near recovery. House prices fell 17.2 percent in the three months to January compared with a year ago. Analysts had predicted a fall of 1.6 percent on the month, for an annual decline of 18.4 percent.

"We treat this number as highly suspicious and we don't believe the housing market has turned. We think this rise will prove erratic," said David Page, economist at Investec.

The pound rose slightly against the dollar after the stronger-than-expected figures, but dealers are still expecting the Bank of England to cut interest rates by 50 basis points to a record low of 1 percent at 1200 GMT.

The average house price is now 163,966 pounds ($236,000), Halifax said.

"There are some very early signs that market activity may be stabilising, albeit at quite a low level," said Halifax chief economist Martin Ellis.

"Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market."