House prices increased by +0.7% in January following dip of -0.2% in December, with the average property price of £299,138 representing a new record high .
This is according to the latest Halifax House Price Index which also reveals that annual growth eased slightly to +3.0% (vs +3.4% previous month) and that Northern Ireland maintained the strongest UK annual house price growth.
Commenting on the latest figures Halifax head of mortgages Amanda Bryden said: “Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. 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.”
Positive indicators
She added that despite geopolitical uncertainties, and waning consumer confidence, other key indicators looked fairly positive for the housing market. “The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-ofliving squeeze.”
Ingenious managing director, real estate Tom Brown, said: “Today’s Halifax data shows that the resilience and appeal of the UK property sector persist. Though we have seen higher inflation and sticky borrowing rates, we welcome the BoE’s recent rate cut and what will hopefully be the start of the much needed falling rate cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away.”
However, he said it was crucial to recognise that the situation wasn’t consistent nationwide or across different property pricing brackets. “It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading. In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale Buy-to-let investors.”
Property affordability
OnTheMarket president Jason Tebb commented: “The slowdown in annual growth suggests that affordability is keeping a lid on property values with buyers not prepared to pay inflated prices. Sellers should bear this in mind if they want to take advantage of the usually busier spring market.
He added: “Higher interest rates have dampened activity so the latest rate cut from the Bank of England will be crucial in giving the market a boost. As we approach the end of the stamp duty concession in March, it will also give the market some needed impetus for later in the year, particularly if expectations of further rate cuts come to fruition.”