House prices rose 1.9% in January

The increase more than offset December's 1.6% drop and left the average home costing £163,966, according to Halifax.

The group stressed that it was important not to place too much emphasis on any one month's figures, but it added that there were some very early signs that market activity may be stabilising, although at quite a low level.

The annual rate of house price inflation, which measures prices in the previous three months compared with the same period a year ago, remained deep in negative territory at a new record low of minus 17.2%.

But a straight year-on-year comparison showed some signs of easing in the pace at which prices are falling, with the average home costing 16.4% less than it did in January last year, compared with a drop of 18.9% between December 2008 and December 2007.

Martin Ellis, housing economist at Halifax, said: "It is always important not to place too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. There are some very early signs that market activity may be stabilising, albeit at quite a low level.

"Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market."

He added that prices were still 5.1% lower during the past three months than they had been during the previous quarter, and this measure provided a better indicator of the underlying trend.

Recent anecdotal evidence suggests there has been increased activity in the housing market, as steep interest rate cuts, combined with the sharp fall in house prices seen during the past year, tempt potential buyers back.

Figures from the Bank of England showed that the number of mortgages approved for house purchase rose by 15% in December, although they are still running at less than half of the level they were at a year earlier. The Royal Institution of Chartered Surveyors has also reported a jump in new buyer inquiries, while a survey carried out by property website Rightmove found that 66% of people think now is a good time to buy a home.