Britain’s biggest mortgage lender provided further evidence of green shoots in the housing market today when it revealed prices rose for the fourth consecutive month in January.
Halifax said the average cost of a home in the UK went up 1.3% last month to £291,029, a jump of £3,924 in cash terms.
It lifted the national annual growth rate to 2.5%, the highest for a year, although the London market lagged with an annual fall of 0.4% to an average of £529,528.
The latest data confirms growing evidence that a stampede of buyers back to estate agents in the new year following a frenzy of rate cuts by banks and building societies is starting to feed through to prices.
Many experts had expected a property market crash in 2023 and early 2024 as the Bank of England jacked up interest rates to combat high inflation. But while prices did decline, the results have been nothing close to those projections.
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: "It was like the property market landed on a trampoline canvas at the start of 2024, with January seeing a real bounce-back in activity levels. Enquiries from purchasers were massively up, buoyed by growing confidence around mortgage rates in the medium term. The predictions from some commentators of a house price crash are looking highly unlikely now."
The January growth comes as lenders aggressively cut mortgage rates during the month, with many commentators labelling it a 'price war', as markets anticipated a wave of base rate cuts from the Bank of England this year. Lenders reintroduced some products with sub-4% interest rates during the month - though only for those with very large deposits, while the average five-year fix fell below 5.2%.
Halifax mortgage director Kim Kinnaird said: “The average house price in January was £291,029, up +1.3% or, in cash terms, £3,924 compared to December 2023.
“This is the fourth consecutive month that house prices have risen and, as a result, the pace of annual growth is now +2.5%, the highest rate since January last year.
“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. This has resulted in a positive start to 2024’s housing market.
“However, 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.
“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.”
Matt Thompson, head of sales at Chestertons, said: “The gradual introduction of more attractive mortgage products boosted buyer confidence in January, resulting in more buyers entering the market. This increase in activity was further driven by pent-up demand from house hunters who were unable to find a property last year. Sellers also feel more confident about attracting the right buyer for their home which led to a slight increase in the number of properties being put up for sale in January.”
In the last week, mortgage prices appear to be going up again, as the Bank of England suggested that it may not cut rates as aggressively as hoped.
