The UK housing market opened the year with encouraging figures, as Halifax reported a 0.7% increase in average house prices in January. This more than offset December’s 0.2% slip and brought the average property price to a new record of £299,138. Despite this, the annual growth rate eased to 3.0%, the slowest pace since July last year.
Amanda Bryden, head of mortgages at Halifax, commented, “Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.”
She further highlights that geopolitical issues and declining consumer sentiment continue to weigh on confidence, but other factors paint a steady picture for the housing market. The Bank of England’s recent rate cut, with the likelihood of more reductions this year, combined with household earnings staying ahead of inflation – though perhaps by a smaller margin – may ease some of the financial strain many are still facing.
According to Byrden, mortgage rates are expected to stay between 4% and 5% through 2025, shaped by both international and domestic monetary conditions. Buyers have largely adjusted to this new level, moving away from the ultra-low rates of recent years.
But housing supply shortages remain the key issue. A limited number of available properties, paired with gradually improving affordability, should allow house prices to continue moving upward, though only moderately.
Looking across the UK, annual price growth slowed in most regions and nations at the start of the year.
Northern Ireland continued to lead with the highest annual price growth, though this eased to 5.9% in January from 7.3% in December. The average property price there now stands at £205,473.
Wales saw house prices climb 3.6% year-on-year, with the average property costing £227,397.
Scotland recorded a smaller increase, with prices rising 2.4% over the last 12 months. The average home is now priced at £210,690.
In England, the North East took the lead from the North West in annual price growth for the first time since September 2023. Prices in the North East grew by 5.2%, bringing the average property value to £178,696.
Meanwhile, London continues to hold the highest property prices in the country, with an average value of £548,288, a 2.8% increase on the year.
Reference: Landlord Today
