Halifax: House price growth hits 12-month high but risks remain

Annual house price growth hit a 12-month high last month as values rose for the fourth consecutive month but future drops can’t be ruled out, according to Halifax.

The lender’s latest House Price Index recorded a 2.5% annual rise in house prices to £291,029, £3,900 more than last month.

The figure was up 1.3% on a monthly basis.
Northern Ireland recorded the strongest growth across all the nations or regions within the UK – where house prices increased by 5.3% on an annual basis

The South East fell the most last month when compared to other UK regions, with homes selling for an average £379,220, down 2.3%, a drop of £8,866.

London retains the top spot for the highest average house price across all the regions, at £529,528, albeit prices in the capital have declined by 0.4% annually.

Kim Kinnaird, director at Halifax Mortgages, said 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. 

She 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.”

Commenting on the index, Tom Bill, head of UK residential research at Knight Frank, said: “After suffering the effects of 14 consecutive rate rises last year, house prices are getting stronger as multiple interest rate cuts are expected in 2024. 

“The number of new buyers registering and offers being submitted have increased since lenders dropped their prices last month, which suggests demand and activity levels will only get stronger, leading to a modest a single-digit price increase this year.”

Nathan Emerson, chief executive at Propertymark, added: “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 the Bank of England gradually starts slashing interest rates in order to further to stimulate growth in the housing market."