UPDATE 1-Halifax turns more upbeat on UK house price outlook

Wed Mar 6, 2013 4:30am EST

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* Halifax forecasts "low single digit" gains for 2013

* Says resilient labour market, FLS scheme supporting prices

LONDON, March 6 (Reuters) - Britain's biggest mortgage lender reported a sharper-than-expected rise in house prices on Wednesday and said it was more positive about the outlook for the market for the rest of the year.

Halifax, part of the HBOS group, said house prices were 1.9 percent higher in the three months to February than a year ago, the third successive increase in this measure.

Prices were 0.5 percent higher than in January.

"The underlying trend is more positive, both in terms of prices and activity," Halifax chief economist Martin Ellis told Reuters.

"We were previously forecasting flat prices over 2013. Now I'd expect growth in the low single digits."

The mortgage lender said Britain's resilient labour market was helping to support prices, as was the Bank of England's "Funding for Lending" scheme which helps banks borrow more cheaply.

Figures show that while the scheme has not had much success in providing funds to small and medium-sized companies, it has helped increase the availability and affordability of mortgages.

Nevertheless, housing turnover remains little more than half its peak level of 2007, and weak income growth is likely to cap price gains for the time being.

"While it is looking increasingly possible that house prices could eke out a modest gain over 2013, it remains hard to see house prices making any decisive move upward," said Howard Archer at Global Insight.

Figures from rival lender Nationwide last week showed house prices rose 0.2 percent in February after a 0.5 percent rise in January.

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