House prices rebound unexpectedly

House prices recovered in December after three consecutive monthly falls, a survey by the country's biggest mortgage lender showed on Tuesday, easing fears of a precipitous decline in the property market.

HBOS's Halifax survey showed house prices rose 1.3 percent on the month, taking the three-month rate of inflation compared with a year earlier to 5.2 percent, the lowest in nearly two years, and the average house price to 197,039 pounds.

Analysts had forecast a fall of 0.5 percent on the month and a decline in the three-month rate of house price inflation to 4.9 percent.

The findings contrasted with other recent surveys which have shown month-on-month house price falls. Nationwide reported a 0.5 percent fall in house prices last month following a 0.8 percent decline in November.

However, Halifax revised down the prior month's reading to show a 1.3 percent fall - from a 1.1 percent fall previously - meaning December's recovery merely erased November's losses.

"The jump in December price growth seen here represents a corrective move in the wake of the cumulative 2.3 percent decline in prices during the preceding three months and does little if anything to challenge the decidedly weak trend," said Richard McGuire at RBC Capital Markets.

Halifax said house prices in 2007 as a whole rose by 5.2 percent which it said was only the second year since 2001 that prices had risen by less than the long-term average of 8 percent.