Over the last year property prices grew by 2.5% which is the highest annual growth in the Halifax House Price Index since January 2023.
A typical home in the UK now costs £291,029, which is over £3,900 more than last month, Halifax revealed.
Kim Kinnaird, director at Halifax Mortgages, said the 1.3% rise over the last month is equivalent to £3,924. She thought the recent fall in mortgage prices has contributed to the improvement to the housing market.
“The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers,” Kinnaird explained. “This has resulted in a positive start to 2024’s housing market.”
There was a warning, however, that with interest rates remaining ‘elevated’ compared to the historic lows seen previously and demand continuing to exceed supply, things were still tough for those hunting for their first home.
“For those looking to buy a first home,” Kinnaird said, “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.
“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 prices in your region
Halifax’s data showed Northern Ireland had the strongest growth across all the nations or regions within the UK with prices rising by +5.3% over the year.
Scotland and Wales both experienced growth of 4% on an annual basis whilst in England the North West had the highest growth of 3.2%. The South East of England saw prices dip, however, with homes selling for 2.3% in January compared to a year earlier.
London remains the most expensive place for house prices. Although valued dropped by 0.4% the average property is still £529,528.
What’s the outlook for house prices?
Karen Noye, mortgage expert at Quilter, said today’s data showed the housing market was ‘on the road to recovery’. But, she said the recent decision by the Bank of England to hold interest rates at 5.25% may have put off some potential buyers from making a move.
“This increase in house prices is a positive sign that the housing market is getting back on its feet,” Noye said.
She added: “Though we are starting to see a gradual increase in confidence and buyers making a tentative return to the market, there are likely many more prospective buyers still stuck in ‘wait and see’ mode who are holding out in the hopes of securing cheaper deals once the Bank switches stance.
“Once the BoE does begin making rate cuts, we will likely see house prices buoyed further as there remains a serious lack of supply.
“For those who are looking to purchase a property this year, seeking professional mortgage advice will ensure you make the best possible decisions for your circumstances during what remains a relatively unpredictable time.”
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