House prices held up rather better than expected in January. An unchanged reading on the month was 0.5 percentage points stronger than the market consensus and enough to keep the yearly change in the Halifax's gauge above zero at 1.9 percent. The flat monthly level followed December's shallower revised 1.3 percent drop and 2.1 percent annual inflation rate. This was the first time since last June that the monthly rate has not been negative.

Even so, the quarterly change, the best guide to underlying developments, now stands at just minus 3.6 percent, down from minus 2.4 percent in the fourth quarter and its seventh straight decline. All regions again experienced weaker annual inflation versus December with the London rate sliding from 2.9 percent to 0.0 percent. Looking ahead, higher mortgage costs and a weakening labour market should contribute towards a falling trend in prices in 2023. However, signs that Bank Rate may be close to topping out should provide some support, as will the ongoing shortage of supply.

More generally, today's update puts both the UK ECDI and ECDI-P at minus 5. In other words, overall UK economic activity is performing broadly in line with market expectations.

Prices are seen sliding 0.5 percent on the month after a 1.5 percent drop in December.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.