Halifax says that UK house prices have stabilised

After four months of house prices falling in the UK, Halifax says they have begun to stabilise.

In its latest house price index, the lender says that the monthly price change between December and January was 0%.

The average house price is now £281,684, down from last month’s average of £281,713.

However, the average price has fallen by 3.6% over the quarter, and the annual price still shows positive growth of 1.9%.

Halifax highlights that the rate of annual growth in house prices slowed down in January in all regions and nations.

‘2023 has brought some stability to UK house prices’

Kim Kinnaird, the director of Halifax Mortgages, said: “The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January at £281,684, a very small decrease on December.

“We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years.

“As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.”

She added: “For those looking to get on or up the housing ladder, confidence may improve beyond the near-term.

“Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”

‘Long-predicted house price crash’

Phil Tennant, the chief operating officer of iBuyer UPSTIX, said: “Despite some commentators taking a 0.6% rise in asking prices in January as evidence that the long-predicted house price crash was a myth, Halifax’s figures, which record the price at the time of mortgage approval rather than the more optimistic prices on listings, are a reliable indicator that prices will continue to fall.

“Extrapolating the trend since values peaked in August 2022, the market seems to be following the trajectory of the 2008 crash, having dropped 2.3% in five months.

“Yet when and where the market will bottom out is still very much an open question.”

He adds: “Realistically, it’s those currently part way through transactions that will be suffering the most. A cool market greatly increases the risk of broken chains, which are already endemic.”

‘The shock of the mini-Budget at the end of September’

Jeremy Leaf, a north London estate agent and former RICS residential chairman, said: “It was inevitable that the shock of the mini-Budget at the end of September, which prompted a steep rise in mortgage rates and the inexorable increase in the cost of living, would have an impact on the housing market.

“However, since the turn of the year, buyers and sellers have been slowly coming to terms with the changed environment. “Buyers are negotiating hard, especially the considerable number who are largely equity-driven or not even dependant on mortgage finance so won’t show up in these figures.”

‘Confidence within the financial and housing markets’

Tomer Aboody, a director at MT Finance, said: “There are signs of a little more confidence within the financial and housing markets, which has brought some stability to the latter with property prices relatively unchanged.

“As the Prime Minister is pushing to halve inflation, and with Swap rates falling or at least stabilising at more affordable levels, buyers are feeling more hopeful although expectations are having to be managed due to tighter affordability.

“A possible mantra for the year ahead is for buyers to stay sensible and beware of overstretching themselves. Homes will be there to be bought but at a level which should suit the individual buyer’s affordability.”

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