Has the market maintained its momentum?
House prices in the UK displayed a steady increase in January, marking the fourth consecutive monthly rise, according to data from Halifax.
The average house price climbed by 1.3% compared to December 2023, reaching £291,029. This represents a cash increase of £3,924.
On an annual basis, property prices surged by 2.5%, representing the highest rate of growth since January 2023.
Kim Kinnaird, director at Halifax Mortgages, attributed this growth to various factors, including reduced mortgage rates due to increased competition among lenders, diminishing inflationary pressures, and a resilient labour market. These factors have boosted confidence among both buyers and sellers, resulting in a positive start to the housing market in 2024.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, agreed that lenders lowering mortgage repayments has indeed increased buyer confidence.
“In our offices, more valuations, listings and especially viewings have been the result,” Leaf said. “However, lingering cost-of-living worries mean the market remains price-sensitive, so it is only the realistic sellers who are able to take advantage. Over-optimism will stop any recovery in its tracks.”
According to Marc von Grundherr, director at independent lettings and sales agency Benham and Reeves, the general view is that 2024 will be a far more fruitful year for the UK property market.
“We’re already seeing early signs of this, with a fourth consecutive monthly increase in house prices and a sharp increase in both new sales listings and the number of buyers submitting offers,” he noted. “It really is all systems go at the moment and as market activity continues to build, property values will continue to ripen.”
For James Briggs, head of intermediary sales at mortgage lender Together, a rise in house prices “indicates a heartening shift in market confidence.”
“While we are still early in the year, mortgage rates are beginning to fall as lenders anticipate a calming of inflation and possible falls in the Bank of England base rate in the next few months,” Briggs said. “This relative stability could create clear opportunities for buyers to get a foot on the ladder for the first time.
“There may also be opportunities for landlord investors in the private rented sector to buy the right type of properties to meet what remains an incredibly strong rental demand from potential tenants.
“However, with some analysts predicting that mortgage rates could keep falling later this year, some hopeful buyers may continue to wait and see before taking the plunge with their purchase decisions.”
Kinnaird added that while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply.
“For those looking to buy a first home, the average deposit raised is now £53,414, around 19% of the purchase price. It’s not surprising that almost two thirds (63%) of new buyers getting a foot on the ladder are now buying in joint names,” she further commented.
“Looking ahead, affordability challenges are likely to remain, and further modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment.”
House price movement in the regions
The latest Halifax House Price Index also showed that across the UK, Northern Ireland recorded the strongest annual growth in house prices, increasing by 5.3% to an average of £195,760. Scotland and Wales also saw positive growth, with house prices rising by 4% annually to £206,087 and £219,609, respectively.
Regions such as the North West (+3.2%), Yorkshire and Humber (+2.8%), North East (+2.0%), and East Midlands (+0.5%) also experienced increases in house prices over the past year.
The South East saw the most significant decline in house prices last month, with homes selling for an average of £379,220, marking a 2.3% drop compared to the previous month.
London retained its position with the highest average house price across all regions, standing at £529,528, although prices in the capital have decreased by 0.4% annually.
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