Faltering house prices staged a pre-Christmas fightback rebounding sharply after falling for the previous three months in a row, the latest snapshot of the property market from Halifax suggested this morning.

Howwever, over last year as a whole, Halifax’s data shows that British house prices climbed by 5.2 per cent, the slowest rate of growth for 12 months, with the average cost of a home rising by £11,759 to £197,039 but just failing to breach the £200,000 barrier.

This left 2007 as only the second year since 2001 when house prices have risen by less than the long-term average of 8 per cent. Halifax said average house prices had soared by 182 per cent over the past decade, almost trebling from £70,000 at the end of 1997 soon after Labour came to power, to £197,000 today.

The nation’s biggest mortgage lender said that average national house prices, based on its loans to homebuyers, jumped by 1.3 per cent during December.

The last-minute rally reversed the 1.3 per cent slump in prices that Halifax’s figures show took place in November, and also followed declines of 0.7 per cent in October, and 0.6 per cent in September.

The December bounceback means that prices were slightly lower, by 0.8 per cent, over the final quarter of last year as a whole, and confounded City forecasts that the value of the nation’s homes would succumb to a fourth consecutive decline last month.

The better than expected figures will ease mounting pressure on the Bank of England to deliver a further quarter-point cut in interest rates on Thursday, on the heels of last month’s reduction, amid fears that the sliding property market will undercut consumer spending and broader economic growth.

But the Halifax sounded a warning that the welcome news for homeowners did not signal that worries over the outlook for house prices can be dismissed and renewed its prediction that prices will remain flat, on average, of this year as a whole.

The mortgage bank said that a mixed pattern of monthly rises and falls in prices, as seen in the closing months of last year, typically seen as the housing market became more subdued.

It noted that when the boom in house prices last succumbed to a significant slowdown, between July 2004 and the following summer, its figures had shown six monthly falls in pirces, and six increases. A similar pattern was also seen during 2000.

Martin Ellis, Halifax’s chief economist, said that the market continued to cool during the final quarter of last year, pinning the blame on a combination of higher mortgage repayments after five previous interest rate increases from the Bank, and a decline in earnings after inflation. He said that both factors had put pressure on households’ incomes, depressing both prices and activity levels in the property market.

Halifax predicted that while the housing market was set to stagnate this year, with prices likely not to rise much, if at all, it would continue to find support from a broadly sound economy, despite weaker growth.

“The economy is in good health,” it said, predicting that the Bank of England’s Monetary Policy Committee was likely to deliver at least two further quarter-point cuts in interest rates over the year to bolster activity.

Halifax is forecasting that the economy will grow by between 2 and 2.5 per cent during 2008, after expanding by about 3 per cent last year, and sees some slowdown in consumer spending and company investment, but it expects employment to remain at record levels despite the modest slowdown it anticipates.

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