Hometrack's national December survey of the housing market reveals that house prices rose by 0.1%, ending a seven-month declining trend in price changes. According to Hometrack, the full year saw an overall 8% rise in house prices. While house price rises started the year strongle, the monthly rises have been reducing ever since, culminating in a fall of 0.1% in November. The small December rise marks an end to this declining trend.

The monthly survey revealed that the best performing counties in December were Cornwall (0.6%), Tyne and Wear (0.4%) and Essex (0.4%). Cornwall has also experienced the highest house price rises over the last 6 months (4.2%). The worst performing counties are Gloucestershire, West Sussex, Surrey, Kent and North London, all experiencing a fall in prices of 0.1%. With the exception of the South East, the better performing regions are mainly on or near the outer limbs of the country, i.e. the North (Tyne and Wear, Cumbria, Northumberland), the East (Norfolk, Suffolk and Essex) and the South West (Cornwall and Dorset). This reflects the fact that these regions have not shared the strong rises in house prices, encountered over the last two years, in mainly south east and central regions, and are now beginning to catch up - a ripple effect from the centre.

Sales agreed bucked the normal seasonal trend and increased 0.2% in December. This follows a strong sales recovery in November of 2.8% after a weaker October. House prices achieved, as a percentage of the asking price, have also risen slightly in December. This suggests that the housing market is beginning to shrug off fears of a recession, and that house prices will continue to rise in the new year, albeit at a more moderate rate compared to the beginning of 2001.

John Wriglesworth, hometrack's housing economist, commented: "2001 has seen strong house price rises, but with a declining monthly trend over the year due to rising fears of unemployment and a general recession. However, the December price uplift, together with a slight strengthening of sales and the percentage of the asking price achieved on sale, suggests that house prices are now showing resilience to such fears.

"The lowest interest rates for nearly 50 years and tough competition from mortgage lenders means that mortgage deals are currently the best this country has ever seen. Typical mortgage repayments as a percentage of household income remain well below previous peaks. While unemployment is rising, it does so from an historically very low level. Meanwhile, for the vast majority in employment, incomes are rising well above the retail inflation rate. All this suggests house prices are likely to rise further next year. We are forecasting 5% for 2002 (December on December), with the biggest rises occurring outside London where many homes remain relatively more affordable."

Top 5 performing regions:

Cornwall (0.6%) - The London and South East market dip never reached Cornwall, which has continued to see an active and healthy property market.
Essex (0.4%) - Continues to be popular with those fleeing over priced London, yet maintains excellent road and rail links to the City.
Tyne & Wear (0.4%) - an increase in sales activity both North and South of Newcastle has helped boost prices. The A1 provides a great road link in and out of town.
Cumbria (0.3%) - with foot and mouth restrictions now lifted, Cumbria has experienced a return to confidence and interest in the housing market.
Nottinghamshire (0.3%) - The City of Nottingham has experienced a strong Buy to Let phenomena, driven partly by student demand. The County rail link to Kings Cross has become increasingly popular for commuters previously living in the South East.

Bottom 5 performing regions:

Surrey (-0.1%) - stockbroker belt has been feeling the effects of the 'wobble' in the City for a number of months but agents report more activity during the latter part of the month, which bodes well for 2002.
Gloucestershire (-0.1%) - A slowdown in buyers has left the County with a small price decrease, though there are signs of recovery for this idyllic and popular location.
West Sussex (-0.1%) - Bordering parts of Surrey and with a similar market it has encountered the same knee jerk reactions from Sep 11th.
Kent (-0.1%) - The Secret Garden of England has struggled temporarily to maintain the strong overall rises seen throughout the early and middle stages of the year.
North London (-0.1%) - Buyers here have been less willing to pay the prices previously achieved in the summer. This, coupled with the traditional seasonal slowdown and job redundancies has led to a halt in a market that performed well earlier this year.

Performance by county:

Performance by city: