The average price paid by a first-time buyer breached the £100,000 barrier for the first time in January following a 22.6% rise in the price paid for such properties over the past year, says a report by Britain’s biggest mortgage lender. A year ago, the average price for a first-time buyer was £82,968.

House prices increased by 2.2% in January, demonstrating the continuing strength of the market, said the Halifax today.

The low stock of second-hand homes for sale is contributing to the continuing upward pressure on house prices in recent months. Halifax Estate Agents – one of the country’s largest networks – confirms that this trend has continued so far this year with property listings lower than a year ago.

House prices rose by 16% over the past year. Many experts expect the Bank of England to raise interest rates tomorrow to help cool the market.

Whilst increasing interest rates will have an adverse effect on housing affordability, said the mortgage company, the likely scale of the rise in rates will mean that mortgage payments will remain low as a percentage of earnings. Mortgage payments currently account for 13% of gross earnings. Should base rates rise to the City consensus figure of 4.5%, this would rise to around 15%, below the long-run average of 21%.

The economy is expected to grow more rapidly in 2004 than during the past three years, which should stimulate further increases in employment, therefore further underpinning the most fundamental pillar supporting the housing market.

Possessions and mortgage arrears fall to their lowest for more than 20 years….

In spite of the widely publicised concerns about the recent rapid rises in house prices and the build-up of record levels of debt, recently published CML figures show that possessions and arrears have declined further.

The number of properties taken into possession fell by 36% in 2003 to 7,630 (1 in 1,500 mortgages). This was the fifth successive annual decline and the lowest yearly total since 1982. Mortgage arrears in 2003 were also at their lowest levels since the early 1980s.