House prices in last three months were 1.9% higher than in the previous three months, according to the Halifax.
The quarterly rate of change increased for the first time since July 2014, but remained below the rates recorded between June and September last year.
Prices in the three months to January were 8.5% higher than in the same three months a year earlier. This was an increase from 7.8% in December. This measure of annual house price growth was at its highest since October 2014 (8.8%), but remains significantly below the peak of 10.2% in July 2014.
House prices grew by 2.0% between December and January. This is the biggest January monthly increase since 2009 (2.4%).
Martin Ellis, housing economist at the Halifax said: “This bounce-back in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December. These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market.
“It is, however, too early to draw any firm conclusions. The monthly figures in January can be particularly volatile due to the lower volumes of activity at this time of year and there have been unusually large rises on occasion in the past, such as in 2007 (2.3%) and 2009 (2.4%).
“Housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills. Nonetheless, we expect the overall downward trend in house price growth seen since last summer to continue over the coming months. Nationally, house prices are predicted to increase in a range of 3 to 5% in 2015 compared with 8% last year.”
“Despite growing evidence of a slowdown in the housing market over the past few months, mortgage approvals rose at the end of last year,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.
“Lenders are certainly doing their bit to entice borrowers, with Barclays launching its lowest ever five-year fix at 2.29% and Virgin Money launching a five-year deal pegged at 2.24%, as we edge ever closer to a sub-2% five-year fix.
“Even though it is coming, it will still be truly astonishing when it happens: an incredibly low rate for medium-term certainty. Those borrowers worried about an interest rate rise over the next five years will be snapping up these deals, assuming of course that they have a big-enough deposit and meet the lender’s criteria.
“While swap rates have fallen again in the past few days, with lenders adjusting their fixes accordingly, the extent of the reductions is mainly driven by lenders’ volume requirements. In other words, rates are likely to continue to fall not so much because swap rates are but because lenders are keen to drum up more business. This is great news for borrowers who will be spoilt for choice with a range of record-low products, and is likely to further support the housing market.”