UK house prices hit 12-month high in January

UK house prices rose by 2.5% year-on-year in January, the highest annual growth rate since January 2023, according to Halifax.

The lender’s house price index reveals that the average house price last month was £291,029, up by £3,924 or 1.3% from December 2023.

This was the fourth month in a row that house prices increased, driven by lower mortgage rates, easing inflation and a resilient labour market.

‘Demand continues to exceed supply’

Kim Kinnaird, the director of Halifax Mortgages, said: “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.”

She added: “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.”

‘2024 has started with a bang’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “2024 has started with a bang in the property market, as falling mortgage rates lit a fire under buyers.

“This is a chance for struggling sellers to finally shift their home, but it may not be a turning point for the market as a whole because there’s still a risk this recovery fizzles out.”

She adds: “This bounce in sales reflects Bank of England figures, which showed more mortgages were approved for purchases in December.

“It also comes on the back of RICS figures which revealed buyer numbers were starting to pick up at the end of 2023.

“Finally, that’s starting to feed through into more sales.

“Buyers can see inflation falling, and mortgages rates dropping, and because the jobs market is still pretty robust, they’re feeling confident enough to buy.”

‘A far more fruitful year for the UK property market’

Marc von Grundherr, a director of Benham and Reeves, said: “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, the chief executive of Yopa, said: “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.”

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