Annual house price growth softens to 1.3%: UK HPI

Average UK house prices increased by 1.3%, to £268,000, in the 12 months to January, down from 1.9% in the year to December, the latest UK House Price Index from the Land Registry shows.

Average house prices increased by 1.1% in England, 2.0% in Wales, and 1.3% in Scotland.

The North West was the English region with the highest house price inflation, at 3.1%, although down from 4.0% in the 12 months to December.

Annual house price inflation was lowest in London, where prices fell by 1.7% in the 12 months to January, compared with a fall of 1.2% in December. This is the sixth consecutive month in which London has seen an annual fall in house prices.

Lee Williams, national sales manager at Saffron for Intermediaries, commented: “The latest increase in house prices is encouraging, particularly given the heightened level of global uncertainty in recent weeks. Back-to-back rises in January and February pointed to a solid start to the year and underline the market’s underlying resilience, even as external pressures continue to build. While earlier momentum was supported by improving sentiment and more active pricing from lenders, recent geopolitical developments have caused the market to pause, with some providers repricing or withdrawing products as conditions shift.
 
“Looking ahead, the outlook remains more measured. With expectations of further interest rate cuts now on hold, as reflected in last week’s decision to hold rates, alongside ongoing global uncertainty and a shifting policy landscape, some buyers may adopt a more cautious approach in the near term."

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “The property market continues to demonstrate resilience despite a backdrop of global uncertainty.

“The Middle East conflict has contributed to increased caution across financial markets. Mortgage rates have already edged upwards in response, and this is naturally becoming a talking point among applicants.

“We are seeing a slight softening in viewing numbers as some buyers pause to assess the situation; however, the underlying market remains robust. Serious buyers are still very much active, with second viewings continuing and sales being agreed at levels typical for this time of year. While there is greater awareness of cost, for the right property, committed buyers are continuing to move forward with confidence.”

Chris Storey, chief commercial officer at Atom Bank, added: “Between the chaotic rate of change in the mortgage market, and continued house price volatility, it’s not easy for would-be homebuyers at the moment.

“While the headline rate of house price growth may be down, the reality is there is real variance between different types of property. Rightmove last week reported the price gap between typical first-time buyer properties and larger homes has reached a record high, making it far harder for homeowners to move up the ladder. Meanwhile potential first-time buyers face a real battle to save a decent deposit, given the continued cost of living pressures putting every penny under pressure.

“Throw in the volatile mortgage market, where lenders are being forced to reprice and adapt their ranges due to the impacts of geopolitical events, and buyers face an even more stressful experience than usual. 

“For brokers and borrowers, now is the time to prioritise working with lenders who can move quickly, providing reassurance and easing some of that stress. In such fast-moving volatile times, brokers have a crucial role to play in bringing some calm, and the right partnerships can help them do just that.”