"Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading"
- Kim Kinnaird - Halifax
Newly released figures from Halifax have shown that house price recovery is continuing across the UK with average prices up by 0.4% in February - marking the fifth monthly rise in a row.
Property prices grew +1.7% on an annual basis (vs +2.3% last month) and see the price of a typical UK home now standing at £291,699, around £1,000 more than last month.
National and regional breakdown
Northern Ireland is the strongest performing nation or region in the UK – house prices here increased by +5% on an annual basis. Properties in Northern Ireland now cost an average of £195,956, which is £9,359 more than the same time in February 2023.
The North West saw positive growth of +4.4% on an annual basis to £232,128. The North East (+4.2%) and Wales (+4.1%) also recorded strong increases over the last year.
London continues to have the highest average house price across all of the regions, at £536,996. Prices in the capital have increased +1.5% which is the first positive annual growth seen since January 2023.
Properties in Eastern England fell the most last month, when compared to the rest of the UK’s nations and regions, with homes selling for an average of £329,927 (-0.8%), a drop of £2,794 since the same time in 2023.
Kim Kinnaird, Director, Halifax Mortgages, said: “UK house prices rose for the fifth consecutive month in February, up by +0.4% or £1,091 in cash terms, with the average house price now £291,699.
“On an annual basis, house prices were +1.7% higher than a year ago, slowing from +2.3% in January. However, these figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.
“In fact, the average price tag of a home is now only around £1,800 off the peak seen in June 2022. While it is encouraging that we’ve seen growth in recent months, what happens next remains uncertain. Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading.
“Even with growing wages and inflation falling back, raising a deposit and affording a sizeable mortgage remains challenging, especially for those looking to join the property ladder, so it remains a possibility that there could be a slowdown in the housing market this year.”
Nathan Emerson CEO at Propertymark comments: “The start of 2024 continues to look positive for many homeowners who are hoping to sell their home or jump on the property ladder. Our member agents reported that there had been an 89 per cent increase in new properties coming onto the market and a 129% in the number of market appraisals undertaken.
The Bank of England recently stated that the central bank does not have to meet its target of cutting inflation down to two per cent before they start cutting interest rates.
"To persuade more people this is the year to sell their home, the Bank of England should start considering reducing interest rates to ease borrowing costs for aspiring homeowners who deserve some economic confidence after experiencing turbulence since 2020.”
Tom Bill, head of UK residential research at Knight Frank, said: “Inflation is likely to hit its 2% target before the summer, a year ahead of the OBR’s November forecast. That’s good news for anyone buying or remortgaging as it will bring down borrowing costs.
"However, financial markets are expecting fewer rate cuts than at the start of this year due to stubborn wage growth. This mixed picture means transactions should increase versus last year and we expect prices to rise by 3% but the last two months of weaker inflation signals have been a useful reminder that asking prices need to remain realistic.
"The regional breakdown shows how affordability remains a big constraint on the market, with better-value areas seeing stronger price growth over the last year.”
Matt Thompson, Chestertons’ Head of Sales, says: “Buyers have become increasingly confident since the end of last year when interest rates were held at 5.25% and mortgage rates started to come down. This sentiment carried through to January and February 2024.
"Meanwhile, sellers have also been feeling more optimistic about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale.”
Sam Mitchell, CEO of Purplebricks said: “The housing market has been on the path to recovery in recent months, helped along by consecutive holds on interest rates from the Bank of England and banks actively competing on mortgage rates. But this recovery remains fragile, and the Government had a prime opportunity during yesterday’s Spring Budget to stabilise this upward trajectory. Regrettably, this was an opportunity missed.
"The lack of a concrete decision from The Chancellor on stamp duty cuts has a very real potential to derail this newfound progress. This may wrongly and unnecessarily delay buying and selling decisions, as people are left holding out for a change that might come later in the year.”
