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The Halifax bank today released its latest house price index, showing a surprise 1.3 per cent increase in average property prices during December.

However, the positive news applies only to the short term, and follows three consecutive monthly falls - with prices in the fourth quarter of 2007 as much as 0.8 per cent lower than the previous quarter as a result.

"House prices increased by 1.3 per cent in December, reversing some of the declines recorded in the preceding three months," said Martin Ellis, chief economist at Halifax.

"This mixed pattern of monthly price rises and falls is a typical characteristic of a subdued market."

While the news appears to ward off fears of a crash in house prices in the immediate future, the longer-term picture is less clear.

Annual growth slowed to 5.2 per cent in December, down from 6.2 per cent in November and the 11.4 per cent recorded in August – making 2007 only the second year since 2001 when prices have risen by less than the long-term average of eight per cent.

This volatility in the market has led Halifax to predict no rise in prices during 2008, with a buoyant economy – reinforced by high employment, a shortage of supply and falling interest rates – supporting prices.

According to Halifax, the average price for a property in the UK now stands at £197,039.

Yet, this single monthly increase should not be viewed as the turning point in a subdued market.

"It is premature to conclude this is likely to mark a turning point in sentiment. Our suspicion is that the market environment is likely to remain challenging for at the least the first-half of this year and that activity levels will remain subdued," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).

"However, unless inflation proves an increasing barrier to the Bank of England's ability to lower base rates there is unlikely to be a material decline in house prices."

Despite the predicted stagnation of property values, Halifax is reminding property owners that house prices have risen 182 per cent over the last decade – making a property costing £70,000 in 1997 worth £197,000 today.