Home prices have risen for the fourth month in a row, according to Halifax, which reported a 1.3% increase in January.
Over the past year, property prices have risen 2.5%, which is the highest annual growth in the Halifax House Price Index since January 2023.
A typical house in Britain now costs £291,029, which is more than £3,900 more than last month, Halifax revealed.
Kim Kinnaird, director of Halifax Mortgages, said the 1.3% increase in the past month equates to £3,924. She thinks the recent decline in mortgage prices has helped improve the housing market.
“The recent reduction in mortgage rates from lenders as competition increases, alongside easing inflationary pressures and a still-resilient labor market, has contributed to greater confidence among buyers and sellers,” Kinnaird explains. “This has resulted in a positive start to the housing market in 2024.”
However, there was a caveat that with interest rates remaining ‘elevated’ compared to the historic lows seen previously and demand continuing to outpace supply, things were still tough for those looking to buy their first home.
“For those looking to buy a first home,” said Kinnaird, “the average deposit raised is now £53,414, around 19% of the purchase price. Unsurprisingly, almost two-thirds (63%) of new buyers getting their foot on the ladder are now buying under a joint name.
“Looking ahead, affordability challenges are likely to persist and further modest declines should not be ruled out, against the backdrop of broader uncertainty in the economic environment.”
House prices in your region
The Halifax data showed that Northern Ireland had the strongest growth of any country or region in Great Britain, with prices rising by +5.3% over the year.
Scotland and Wales both saw annual growth of 4%, while in England the North West saw the highest growth of 3.2%. However, in south-east England, prices fell, with houses selling for 2.3% in January compared to a year earlier.
London remains the most expensive place for house prices. Although values have fallen by 0.4%, the average property still costs £529,528.
What are the prospects for house prices?
Karen Noye, mortgage expert at Quilter, said today’s figures show the housing market is ‘on the road to recovery’. But, she said, the recent decision of the Bank of England keeps interest rate at 5.25% may have deterred some potential buyers from making a move.
“This increase in house prices is a positive sign that the housing market is back on its feet,” said Noye.
She added: “While we are starting to see a gradual increase in confidence and buyers making a cautious return to the market, there are likely many more potential buyers who are still in ‘wait and see’ mode and holding out in the hope to collect their purchases. cheaper deals as soon as the Bank changes its position.
“Once the BoE implements interest rate cuts, house prices are likely to rise further as a severe supply shortage remains.
“For those looking to purchase a home this year, seeking professional mortgage advice will ensure you make the best possible decisions for your circumstances in a relatively unpredictable time.”