The latest House Price Index from Halifax shows encouraging signs for the housing market.

House prices went up by 1.3% in January, according to Halifax. This increase marks the fourth monthly rise in a row, says the lender. It also reveals that property prices grew by 2.5% annually – the highest annual growth since January 2023. A typical UK home now costs £291,029, over £3900 more than last month.

‘The average house price in January was up by £3924 in cash terms compared to December 2023,’ says Kim Kinnaird, Director of Halifax Mortgages. ‘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.’

Increased confidence in the property market

Halifax says that recent reductions to mortgage rates, along with ‘fading inflationary pressures’ and a resilient labour market, have all contributed to increased confidence among buyers and sellers. This has led to a positive start to 2024’s housing market. However, the lender also acknowledges that interest rates remain high.

‘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,’ says Kinnaird. ‘For those looking to buy a first home, the average deposit 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.

Affordability challenges

‘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,’ adds Kinnaird.

As far as regional changes are concerned, Northern Ireland saw the strongest growth compared to all nations and regions in the UK, with prices increasing by 5.3% annually. Scotland and Wales saw positive changes, with house prices going up by 4% in both countries.

The South East saw the biggest drop last month when prices went down by 2.3%. However, London stayed on the top spot for the highest average house price across all regions at £529,538.

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