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UK house prices rose for a fourth straight month in January to their highest level since October 2022, adding to signs of stabilization in the property market as mortgage rates fall.
The average UK house price rose 1.3 per cent between December and January, Halifax Mortgage Services said on Wednesday. This followed expansions in the previous three months, and was the fastest monthly rate of increase since June 2022.
The rise took the average house price to £291,029, the highest level since October 2022. Prices were 2.5 per cent higher than in January last year, the fastest annual rate in 12 months.
The data is the latest sign that the property market is recovering from the demand hit caused by rising borrowing costs since the Bank of England began raising interest rates in December 2021.
With financial markets expecting the central bank to cut its benchmark interest rate from a 16-year high of 5.25 per cent this year, mortgage rates on popular fixed deals have fallen since the summer.
Kim Kinnaird, director of Halifax Mortgage, said “increased confidence between buyers and sellers” was driven by “the recent reduction in mortgage interest rates from lenders as competition increases, coupled with fading inflationary pressures and a still resilient labor market.”
“This has resulted in a positive start to the housing market for 2024,” she added.
Last week, Nationwide Bank reported that house prices rose 0.7 per cent month-on-month in January. Both Nationwide and Halifax base their house price indexes on the mortgages they approve.
Separate Bank of England data last week showed that real interest rates on new mortgages fell for the first time since 2021 in December, helping push mortgage approvals to a six-month high.
Bank of England figures showed that published mortgage interest rates on popular fixed deals, such as two and five years, fell to their lowest level in seven months.
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Stephen Perkins, managing director at Norwich-based brokerage Yellow Brick Mortgages, said January had seen a “real bounce in activity levels” in the housing market, with inquiries from potential buyers “rising significantly, supported by growing confidence around mortgage rates in the medium term.” “. “.
Despite falling in the second half of 2022 and most of 2023, house prices in January remained £52,000 higher than their level in February 2020, reflecting a boom in demand during the pandemic when interest rates were at a record low, Halifax said.
Prices rose year-on-year in most regions, with Northern Ireland recording the fastest pace at 5.3 per cent. While London recorded a decline of 0.4 percent, southeast England recorded the largest annual decline of 2.3 percent.
Tom Bell, head of UK residential research at estate agency Knight Frank, said more buyers and more homes being marketed as mortgage rates fell meant “levels of demand and activity will become stronger, leading to modest single-digit price increases.” this year”.
