By Daniel Hunter

Figures released by the Halifax have shown that house prices registered their first annual rise since October 2010, rising by 1.3% in January compared with a year earlier.

But the Halifax, now part of Lloyds Banking Group, also said that property values were 0.2% down on December.

The "signs of improvement" in the market, which started in late 2012, continued into the new year, the lender said.

But it added that the outlook for prices was unclear.

Prices in the three months to January were 1.9% higher than in the previous three months, the Halifax said, with the price of the average home valued at £162,932.

"The signs of improvement in the housing market towards the end of last year continued in January. Prices in the three months to January were 1.9% higher than in the previous three months; the strongest figure in this measure of the underlying trend for three years. Prices were also 1.3% higher than in the same period a year ago, marking the first annual rise for 27 months," Martin Ellis, housing economist, said.

"Market activity has also improved with sales in 2012 at their highest for five years. Rising mortgage approval numbers point to further increases in home sales in the coming months. The Funding for Lending scheme has helped lenders to lower interest rates and improve availability in the past few months. This is likely to have been a factor contributing to the pick-up in both home sales and prices.

"The outlook for the UK economy and house prices, however, is more unclear than usual. Subdued economic growth and pressures on household finances are expected to constrain housing demand. Overall, we expect continuing broad stability in house prices nationally in 2013."

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