Halifax has reported that average house prices increased by 1.3% in January, which is the fourth monthly rise in a row.
This means that property prices grew 2.5% annually, the highest annual growth since January 2023.
Halifax said that the ‘typical’ UK home now costs £291,029, over £3,900 more than in the previous month.
Kim Kinnaird, director of Halifax Mortgages, said: “The average house price in January was £291,029, up +1.3% or, in cash terms, £3,924 compared to December 2023.
“This is the fourth consecutive month that house prices have risen and, as a result, the pace of annual growth is now +2.5%, the highest rate since January last year.
“The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers. This has resulted in a positive start to 2024’s housing market.
“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.
“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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “The housing market has got off to a strong start this year, with buyer and seller confidence boosted by four consecutive interest rate holds and the growing belief that the next move in rates will be downwards.
“However, there will still be bumps in the road ahead. While increased competitiveness has led to lower mortgage rates this year, some lenders have also been raising rates. Swap rates, which underpin the pricing of fixed-rate mortgages, have been rising since the turn of the new year, resulting in some ‘best buy’ mortgage rates increasing.
“Borrowers who see a mortgage deal they like the look of would be rise to secure it before it disappears for peace of mind. If, when they come to take the mortgage out, rates have fallen again, they should be able to move onto a cheaper deal.
“Although those remortgaging this year will still see an increase in their payments, the pain will not be as bad as it could have been. Seek advice from a whole-of-market broker and plan as far ahead as possible.”
David Reed, operations director at Richmond estate agency Antony Roberts, said: “A national average house price is of only limited value as the market is made up of many micro markets which can operate very differently. If prospective buyers have found an area where they want to stay and buy for the first time, or move up, or down, the ladder, they will rightly be concerned with local dynamics far more than the national picture. Ultimately property prices do not move either way in uniform fashion.
“On our patch, the market especially for family houses remains strong, particularly since the start of the year, with continued interest from potential buyers buoyed by new year plans.
“The pause in base rate hikes and subsequent decline in mortgage rates certainly helps boost general buyer confidence in the market. But whatever the passing news in this regard, areas such as Richmond retain their steadfast reputation as a highly desirable location to live and remain a huge draw.”