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House prices in England and Wales have risen by 0.1% in December, the first increase in a year-and-a-half, according to research company Hometrack.

The average house price is now £160,900, although their value still fell 1.59% in 2005.

The growth this month was largely driven by Greater London, which reported the strongest growth of 0.3%. However, prices in the North fell by 0.2%.

Richard O'Donnell, director of research at Hometrack, said that the marginal increase was due to declining stock levels available for sale. He also repeated his prediction from earlier this month that house prices will rise 1% in 2006.

But the Construction Products Association said that the generally weak housing market was one of two major reasons for the third consecutive quarter of decline in construction activity. The other factor was a slowdown in important government investment programmes.

CPA economic director Alan Wilen said: "The falls reflects a marked drop in new school, health and social housing projects being released by the government over the last year, while the slowdown in the housing market has depressed the demand for a wide range of products including brick and concrete blocks."