House prices hold steady in January: Halifax

UK house prices remained stable in January, with the average UK property now costing £281,684 compared to £281,713 last month, according to the latest Halifax house price index.

This follows monthly falls of 1.3% in December and 2.4% in November.

The annual rate of house price growth slowed to 1.9% from 2.1% in December, to the lowest level recorded over the past three years.

The slowdown in annual house price inflation is reflected in most nations and regions across the UK.

Wales, which recorded some of the strongest annual house price inflation over the last few years, saw its rate of growth fall to 2.0% (from 6.0% in December) with an average house price of £210,275.

The South West of England has also seen annual house price growth slow considerably, now at 2.7% vs 6.0% in December, with an average house price of £298,853 (dipping below £300,000 for the first time since March last year).

In Northern Ireland and Scotland the pace of annual growth eased more slowly. The growth rate dipped from 7.1% in December to 6.9% in Northern Ireland and from 3.3% to 2.4% in Scotland.

London, which for some time has lagged many other areas of the UK in terms of house price growth, saw the cost of buying an average home fall from £541,472 to £530,396 in January, with annual house price inflation flat (0.0%) compared to 2.9% in December.

Kim Kinnaird, 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. This followed a series of significant monthly falls at the end of last year (-1.3% in December and -2.4% in November).

“The pace of annual growth has continued to slow, to +1.9% (from +2.1% in December), which is the lowest level recorded over the last three years. The average house price is now around £12,500 (-4.2%) below its peak in August last year, though it still remains some £5,000 higher than in January 2022 (£276,483).

“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.

“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.”

Nicky Stevenson, managing director at Fine & Country, commented: “A month without a fall in house prices brings some much-needed stability to the property market, and will likely encourage more sellers to put their homes up for sale ahead of the traditionally busy springtime.

“The time is ripe for some momentum to start building in the housing market.

“Buyers still face affordability hurdles, but such is the competition between lenders to attract new customers, mortgage rates have fallen despite last week’s base rate rise.

“We are likely to see dips in house prices over the coming months, but this will only be extra encouragement for buyers to get moving again with the prospect of picking up a good deal on their next home.”

Iain McKenzie, CEO of The Guild of Property Professionals, added: “These figures align with what we are seeing on the ground - a gradual cooling of house prices fuelled by softening demand in parts of the country.

“The start of 2023 is proving to be a time of stability for the housing market and it will undoubtedly come as welcome news to sellers who were worried that their home was going to drop in value.

“This isn’t bad news for prospective buyers either – the slowdown of house prices means that they may still be able to find a home within their budget.

“The gentle easing of house prices is nowhere near as dramatic as feared in the wake of the Mini Budget. It’s still too early to tell what the rest of the year will look like.

“Fixed-rate mortgage rates have come down dramatically and competition is returning among lenders. This is good news for people looking to get on the property ladder, so long as they can afford to keep up with the repayments.

“Wrestling the cost-of-living crisis under control will be crucial for the property market in the coming months.”