Even in a weak market, house prices have not lost the capacity to surprise. Nobody expected the Halifax, Britain’s biggest mortgage lender, to announce a 1.3% rise in house prices for last month. I suspect that even within the bank, there was a certain amount of head-scratching.

The Halifax’s latest jump in prices contrasts with a 1.8% fall in December 2006. I don’t remember that being such a weak month, just as I don’t recall December 2007 being such a strong one. Perhaps December is a difficult month.

To be fair to Martin Ellis, the Halifax’s chief economist, he did warn that a pattern of unexpected rises and falls is what you get in a slowing market. But the figures reinforce the warning I gave in last week’s column – that straight-line extrapolations, while easy, are rarely a good way to predict house prices.

On a raw basis, incidentally, the Halifax figures pointed to a doubling of annual house-price inflation between November and December, from 3% to more than 6%. The bank prefers to concentrate on quarterly data, which showed a 2007 price rise of 5.2%.

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So, what has really been happening to house prices since the credit crisis broke in August? If we take the Halifax, it showed a 0.3% rise in August, followed by falls of 0.6%, 0.7% and 1.3% in September, October, and November, then December’s 1.3% rise. Cumulatively, prices were 1% lower last month than in July.

We also have the Nationwide’s take on the same period.

Its monthly readings were: August, up 0.6%; September, up 0.6% again; October, up 1%; November, down 0.8%; December, down 0.5%. Compared with July, it showed a cumulative rise of 0.9%.

A useful way of ironing out contradictions in these series is to take an average of the two. On this basis, prices were up in August, flat in September, up fractionally in October, down sharply in November and up again in December. Taking both together, prices have been flat since the credit crisis broke.

If you wanted to be optimistic, you would say that November marked the point of maximum gloom, when the full effects of the Northern Rock affair and the credit crunch were felt. Yet it might be a little early to draw that conclusion, given that the Bank of England’s credit conditions survey, published earlier this month, suggests mortgage availability will be tight in the first three months of the year.

The other health warning is that recent movements in both the Halifax and Nationwide series might have been distorted by the staggered introduction of home information packs.

So, there are plenty more thrills and spills to come. As we have seen in the past few months, you can have broad stagnation in house prices, but generate a thousand “crash” headlines. For me, the Halifax’s rise was reassuring in one sense. For prices to be broadly flat in 2008, we will need both monthly rises and monthly falls. December was a reminder that you can still have monthly rises.

home.economics@sunday-times.co.uk

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