Average house prices rose by 1.3% in January, a fourth consecutive monthly rise, Halifax’s latest House Price Index has revealed.
Property prices rose 2.5% annually, with a typical home now costing £291,029, over £3,900 more than last month.
Northern Ireland recorded the strongest growth across all the nations or regions within the UK – with house prices increasing by 5.3% on an annual basis.
Properties in Northern Ireland cost on average £195,760, £9,761 higher than the same time in January 2023.
Scotland and Wales both saw positive growth, growing by 4% on an annual basis to £206,087 and £219,609 respectively.
The North West (3.2%), Yorkshire and Humber (2.8%), North East (2.0%) and East Midlands (0.5%) also recorded house price increases over the last year.
The South East fell the most last month when compared to other regions, with homes selling for an average £379,220 (-2.3%), a drop of £8,866.
London retained the highest average house price across all regions, at £529,528; however, prices in the capital declined by 0.4% on an annual basis.
Kim Kinnaird, director at Halifax Mortgages, 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.”
Kinnaird added: “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.”
Reaction:
Nathan Emerson, CEO at Propertymark:
“It is positive to see that house prices have gone up gradually, especially as borrowing costs are being affected by higher interest rates on mortgage affordability.
“Before 2023 ended, the Bank of England’s decision to maintain interest rates should be providing further confidence to buyers looking to make their next or first home move in 2024.
“We would now hope that the Bank of England (BoE) gradually starts slashing interest rates in order to further to stimulate growth in the housing market.”
Daniel Austin, CEO and co-founder at ASK Partners:
“Today’s data shows that the property sector is beginning to show signs of recovery. With a decline in inflation Year on Year and the peaking of interest rates, the overall outlook has considerably improved.
“Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential.
“In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.
“Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors.
“In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.
“A survey conducted by the Royal Institute of Chartered Surveyors (RICS) uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns.
“Although the lead-up to the general election may pose some uncertainty, a subsequent boost in productivity and a decrease in interest rates are expected.
“The hope is that any new government can address local planning issues to stimulate construction and guide the economy out of the downturn.
“As a debt provider, at ASK our focus will be on supporting the best sites in prime locations with well-capitalised sponsors who understand their product.
“Following this strategy, we aim to bolster developers’ initiatives by adopting a flexible underwriting approach, thereby continuing to offer opportunities for the growing number of private individuals opting to invest in property debt.”
Karen Noye, mortgage expert at Quilter:
“This morning’s Halifax house price index suggests the housing market remains on the road to recovery, with prices climbing 1.3% in January and 2.5% year on year, the fourth consecutive monthly rise and the highest annual growth rate since January 2023.
“This increase in house prices is a positive sign that the housing market is getting back on its feet, and it seems that the reduction in mortgage rates driven by a combination of competition between lenders and the pricing in of future Bank of England rate cuts lured in more buyers in the new year, feeding into the cautiously optimistic outlook for the housing market this year.
“The Bank of England held interest rates once more at its latest Monetary Policy Committee (MPC) meeting, and it is unlikely to lower them for some time yet unless inflation starts to drop more rapidly.
“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.”
Guy Gittins, CEO at Foxtons:
“Interest rates being held at 5.25% since September 2023 has helped to both steady and stimulate the UK property market, with buyers reacting positively to a greater degree of economic stability and a reduction in mortgage rates.
“Since the start of the year, weekly mortgage referrals to our mortgage broker, Alexander Hall, have been higher than any weekly level seen throughout 2023.
“This has led to an improvement in mortgage approval numbers in recent months as buyers have acted with urgency to secure these lower rates while they last, while also taking advantage of their improved position in the market with respect to their purchasing power.
“In turn, this has caused mortgage approved house prices to increase and today’s figures from Halifax provide further evidence of this growing market momentum.
“However, it’s important to note that interest rates remain at 5.25% and there is no guarantee of when this will change.
“In the meantime, those looking to purchase with the help of a mortgage are best advised to do so with the support of an experienced mortgage broker to ensure they secure the best available rates and avoid overpaying on their monthly repayments.”
Marc von Grundherr, director of Benham and Reeves:
“The general view is that 2024 will be a far more fruitful year for the UK property market and we’re already seeing early signs of this, with a fourth consecutive monthly increase in house prices and a sharp increase in both new sales listings and the number of buyers submitting offers.
“It really is all systems go at the moment and as market activity continues to build, property values will continue to ripen.”
Verona Frankish, CEO of Yopa:
“Not only have we seen positive market movement with respect to the monthly rate of house price growth in recent months, but we’re now starting to see an improvement with respect to the annual picture and it’s this measure of health that suggests the market is firmly on the up.
“Looking ahead, it’s likely that not only has the property market bottomed out with respect to the decline in house prices seen last year, but it’s also likely that interest rates have now peaked.
“This combination of factors will enthuse both buyer and sellers in equal measure and as the year progresses, we expect further momentum to build.”
Jason Harris-Cohen, CEO of Open Property Group:
“The current economic picture is unsettled at best, but despite this, the property market has continued to show signs of positive growth with not only a fourth consecutive monthly increase in house prices, but the highest annual rate of growth seen in a year.
“Last week’s decision to hold interest rates for a fourth consecutive time will only bring further stability as the nation’s homebuyers continue to act with greater confidence.
“While they may still be treading with a degree of caution, it’s very much a matter of if, not when, interest rates are cut this year.
“When they are, we expect this will open the floodgates to some extent and as buyer demand increases, house prices will continue to strengthen.”
Ruth Beeton, co-founder of Home Sale Pack:
“Despite interest rates remaining at their highest since 2008, mortgage approvals and mortgage approved house prices are on the up and this uplift in market activity is being largely driven by those looking to remortgage while rates have settled.
“Bank of England data shows that mortgage approvals attributed to remortgagers have increased by 15% per month on average since they started to climb in October of last year, more than any other buyer segment.
“Of course, with both the cost of borrowing and house prices remaining far higher than historical levels, the nation’s first-time buyers continue to struggle with their aspirations of homeownership.
“That said, there have been whispers that the Government could be looking to supercharge first-time buyer demand yet again, which would help rebalance the market and help to further stimulate house price growth over the year ahead.”
Peter Stokes, director at Wimborne-based broker, Davidson Deem:
“Mortgage rates being cut aggressively from the very start of January immediately translated into increased demand and activity levels in the residential property market.
“With rates likely to fall a little more over the coming months despite the recent hikes from certain lenders, I can only see things getting busier.
“There is still a degree of economic uncertainty but it has been a strong start to 2024 and, if inflation continues to fall, things could get stronger.
“The quarterly trend in house prices is promising.”
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages:
“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.”
Malcolm Davidson, director at Hull-based UK Moneyman:
“Economists’ predictions of a flat-lining property market in terms of values overall may prove to be right, but from what we’re seeing there could end up being significant variations within it.
“Properties at the top end of the market are languishing on the market despite recent reductions in mortgage rates, but as rates are still a lot higher, potential “next-steppers” are still cautious. However, at the lower end, it’s a different story.
“We have been inundated with first-time buyer enquiries this month and, in echoes of 2022, multiple offers are going in on starter homes, especially as some smaller landlords look to dispose properties from their portfolios.”
Elliott Benson, owner at Leeds-based broker, Sett Mortgages:
“In January, we did double the amount of purchase mortgages compared to last year as rates were cut across the board and it is not looking like it will slow down.
“Right now, the property market is bouyant. I expect this to continue, especially if the base rate is lowered in the first half of the year.
“If it is, that will ignite demand and has the potential to send prices upwards with even more momentum.”
Jake Stott, founder at Manchester-based Mondo Mortgages:
“In January, it was like someone flipped a switch. We were absolutely swamped.
“There’s a real hunger for property, which is no surprise given the amount of pent-up demand. With mortgage rates getting trimmed, it’s full steam ahead.
“We’re not just seeing the usual ‘new year, new me’ crowd either. There’s a tangible shift in the air. If this pace keeps up, we’re in for a bonkers February, too.
“Looking at house prices in 2024, if interest rates keep taking a dip, I reckon we’ll see prices climbing. It’s simple really: lower rates mean borrowers can get their hands on more cash, and that’s like throwing fuel on the property market fire.
“When it comes to those coming off ultra-low fixed rates, sure, there’ll be a bit of a shock to the system. But let’s put it into perspective, it’s not the end of the world.
“Those who opt for a 2-year fixed or tracker will see some pain over the short term, but they should find themselves in a decent spot when they switch to a new product next time round.”
Darryl Dhoffer, director at Bedford-based The Mortgage Expert:
“Demand for residential property in January 2024 certainly picked up, mainly due to lenders reducing interest rates in the first few weeks of the month.
“As the year progresses, my prediction is that house prices will remain stagnant, but a lot will largely depend on how the economy recovers this year.
“Also, the Spring Budget may prove pivotal to the housing and mortgage sectors, which could stimulate a recovery and boost values.
“I’m not expecting any Bank of England base rate cuts until May at the earliest, and this will depend on economic and inflation data at that time.”
Riz Malik, director at Southend-on-Sea-based R3 Mortgages:
“Enquiries were up quite noticeably in January and there seemed to be a renewed level of confidence in the market.
“Next month’s Budget will set the tone for how things progress in the first half of the year with potential tax cuts and the possibility of stamp duty concessions.
“If the US Fed waits beyond March to cut rates, it is unlikely that the UK will see any before summer.
“This means, annoyingly, that we may need to wait a little longer for the base rate to come down the mountain it climbed during most of 2023.”
Gary Bush, financial adviser at the Potters Bar-based MortgageShop.com:
“January on the whole was a busy month. New enquiries for mortgages from first-time buyers and home movers both rose strongly.
“If this level of activity continues, UK property prices have only one trajectory and that’s up. This is especially the case with sought-after homes.
“With fixed mortgage rates all showing a general downward movement last month, with some interesting 5-year deals available, applicants who have a mortgage rate maturing during 2024 should be well placed to gain a good deal via their financial advisers.
“We are 50/50 on whether the Bank of England will cut the base rate in March’s meeting, but if not a cut by the summer is now looking likely.”
Ranald Mitchell, director at Norwich-based mortgage broker, Charwin Private Clients:
“January was upbeat, with a noticeable increase in first-time buyers and home movers looking into their options.
“Property prices may now have bottomed out and buyers who’ve been keeping track, looking for the right time, may well have cottoned onto this.
“Expectations on house price movements are broadly flat for 2024 but anything can happen. Mortgage pricing is a key element to driving demand, and the overall downward trend in pricing is now becoming more volatile with some lenders increasing mortgage pricing.
“Any cut to base rate would signal the turning of the economic corner for many, further boosting the property market.
“The Monetary Policy Committee members remain divided, though, and it will likely need to see inflation hit the 2% target and be maintained before getting a majority vote to cut rates.
“With inflation expected to reach the target in April this year, the indicators are a June decrease in base rate could be on the cards.”
Graham Cox, founder at the Bristol-based Self Employed Mortgage Hub:
“January was noticeably busier, with plenty of buyer interest after a quiet few months, particularly in the autumn.
“However, with uncertainty around when interest rates will be cut, existing borrowers facing huge jumps in their mortgage payments, and a stagnating economy, I believe house prices will continue to drift lower by around 5% this year.
“That’s assuming the government don’t try and ‘intervene’ in the March budget with some scheme like the reintroduction of Help to Buy or a stamp duty holiday.
“Both would be disastrous in my view, as they will just make property even more unaffordable.”
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:
“In Scotland, December took a nap, but January burst into 2024, shattering any notions – and, in some cases, wishes – of a market slowdown.
“Mortgage enquiries across the board have been skyrocketing, signalling a definite resurgence in buyer confidence and interest.
“First-time buyers are the heartbeat, injecting life into the sub-£200k market in Scotland and, as they flourish, those higher up the ladder are also now cautiously exploring mortgage options, tiptoeing both up and down the property ladder.
“Barring unexpected geopolitical surprises, 2024 overall is shaping up to be another robust and positive year for the Scottish housing market. In contrast to the broader UK trend, Scotland maintained stability in 2023, witnessing modest gains in some areas.
“Only an improbable spike in the base rate, for whatever reason, could disrupt this sustainable pattern of annual house price growth.”
Matt Surridge, sales director at MPowered Mortgages:
“It is reassuring to see that house prices are remaining resilient, reflecting the confidence that has returned to the market at the beginning of this year.
“With senior figures at the Bank of England laying the groundwork earlier this week for lowering interest rates, it is likely that we will see an uptick in activity in the coming months, driven by more attractive mortgage rates.
“As buyers begin to accept the new-normal of interest rates, and re-enter the mortgage market, it is critical that advisers are on hand to help borrowers find the deal most suited for them.
“At MPowered, we are playing our part by ensuring rates are as low as possible, giving borrowers the best chance of finding a product that works for their individual needs, and making it easier for brokers to help their clients achieve their homeowning ambitions.”
Nimesh Sanghrajka, managing director at Mantra Group, said:
“After a turbulent period for the economy, falling mortgage rates and growing expectations of interest rate cuts have boosted recent confidence in the market, resulting in another month of house price growth and a positive start to 2024 for the residential sector.
“Buyers have entered the new year with optimism and the gradual introduction of lower rate mortgage products by lenders has only helped this further.
“Interest rates appear to be stabilising as the Bank of England held these for the fourth time in a row last week, providing further stability for home movers looking to proceed with purchases without worrying that mortgage costs may move during the process.
“Further rate reductions could increase buyer enthusiasm even more and lenders are beginning to price this in, but a rapid rebound in activity or house prices is unlikely as rates remain at historic highs and demand continues to exceed supply.
“Sadly, with household budgets still under pressure and stagnant wages combined with flat economic growth only making matters worse, many buyers will still find it difficult to justify moving.
“In the face of a lot of negativity and much uncertainty, the housing market has still managed to hold itself up, demonstrating its resilience.
“While buyers will be keeping one eye on the economy, more competition among brokers to offer palatable mortgage products, along with the broader easing of concerns, should help continue the positive momentum we’ve seen so far this year.”
Sam Mitchell, CEO of Purplebricks:
“There is a growing confidence in the industry, and as a result, there’s been a dramatic increase in the number of buyers, viewings and offers since the beginning of 2024.
“This has been fuelled by banks continuing to compete on mortgage rates.
“Competition for houses is still on the rise, and the number of homes coming to the market is up just 2% year on year.
“Sentiment is particularly strong among first time buyers but it’s currently more of a sellers’ market at the moment.
“This trend is expected to continue so long as inflation continues to slow. There’s evidence showing landlords selling as mortgage rates increase but this yields putting rents under further pressure.”
