Halifax has revealed that house prices went up slightly in January, which is good news after a slight drop in December.
According to the lender, House prices went up by 0.7% last month. The latest Halifax House Price Index, published on 7 February, revealed that the average property price is now £299,138. January’s increase is encouraging news, as prices dipped slightly in December by 0.2%.
‘The UK housing market started the year on a positive note, with average prices rising by 0.7% in January, more than recovering from the slight dip of 0.2% in December,’ says Amanda Bryden, Head of Mortgages at Halifax. ‘However, annual growth slowed to 3% – the slowest rate since last July.’
Annual growth was 3.4% the previous month.
Affordability challenge
Halifax says that affordability is still a challenge for many first-time buyers. However, the lender also describes the market as resilient. ‘There’s strong demand for new mortgages and growth in lending,’ says Bryden. ‘With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.
Base rate cut
‘Despite geopolitical uncertainties and waning consumer confidence, other key indicators look fairly positive for the housing market,’ adds Bryden. ‘The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are still expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze.’
Halifax predicts that mortgage rates will hover between 4% and 5% this year and will be influenced by global and financial markets. ‘Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%,’ says Bryden. ‘But the fundamental issue in the housing market remains the lack of supply. This long-term trend, coupled with a gradual improvement in affordability, should support further modest house price growth this year.’