Residential property prices increased by 0.4% in February, marking the fourth monthly increase in a row, according to the latest Halifax house price index.
The data shows that during the month property prices grew 1.7% on an annual basis, against a 2.3% in the prior month.
The figures showed the average cost of a home in the UK is now £1,000 higher than last month.
London continues to have the highest average house price across all of the regions, at £536,000, up 1.5% year-on-year.
Kim Kinnard, director at Halifax Mortgages said: “On an annual basis, house prices were 1.7 per cent higher than a year ago, slowing from 2.3 per cent in January.
However, these figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.
“In fact, the average price tag of a home is now only around £1,800 off the peak seen in June 2022.”
She added: Even with growing wages and inflation falling back, raising a deposit and affording a sizeable mortgage remains challenging, especially for those looking to join the property ladder, so it remains a possibility that there could be a slowdown in the housing market this year.”
Industry reactions:
Iain McKenzie, CEO of The Guild of Property Professionals, commented: “The property industry is benefitting from a renewed sense of confidence among buyers that now is still a good time to purchase their next home.
“Inflation is coming down from its peak last year and better mortgage deals are popping up from lenders.
“Concerns of affordability still remain and household budgets are squeezed. Any improvement in house price growth should always be tempered by understanding this does make it more difficult for buyers to get themselves on the ladder.
“It was disappointing to see no new incentives for first-time buyers in the Spring Budget. In the run up to the announcement we were hoping to see a 99% mortgage scheme, or an updated version of the help-to-buy initiative, but we were left wanting more.
“The cut to capital gains tax could have the potential benefit of easing the shortage of housing stock that persists in many areas of the country. Landlords looking to market their property for sale and benefit from the tax cut could bring more available homes onto the market.”
Matt Thompson, Chestertons’ head of sales, said: “Buyers have become increasingly confident since the end of last year when interest rates were held at 5.25% and mortgage rates started to come down. This sentiment carried through to January and February 2024. Meanwhile, sellers have also been feeling more optimistic about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale.”
Jason Tebb, president of OnTheMarket, commented: “Normal service appears to have been resumed as far as the housing market is concerned with better mortgage rates since the start of the year boosting buyer and seller confidence.
While prices are edging upwards, sellers may assume that buyers are prepared to pay more but stretched affordability remains an issue for many and with some lenders pricing their mortgages upwards again, borrowers are going to have to get used to paying more than the rock-bottom pricing of the past few years.
An increase in enquiries, pick-up in stock levels and expectations that interest rates will start falling at some point this year, are all helping improve activity. It’s a shame the Chancellor didn’t offer some assistance with measures in his Budget to encourage transactions as this would have been good not only for the housing market but the wider economy.”
Tom Bill, head of UK residential research at Knight Frank, said: “Inflation is likely to hit its 2% target before the summer, a year ahead of the OBR’s November forecast. That’s good news for anyone buying or remortgaging as it will bring down borrowing costs. However, financial markets are expecting fewer rate cuts than the start of this year due to stubborn wage growth. This mixed picture means transactions should increase versus last year and we expect prices to rise by 3% but the last two months of weaker inflation signals have been a useful reminder that asking prices need to remain realistic. The regional breakdown shows how affordability remains a big constraint on the market, with better-value areas seeing stronger price growth over the last year.”
Sam Mitchell, CEO of Purplebricks, commented: “The housing market has been on the path to recovery in recent months, helped along by consecutive holds on interest rates from the Bank of England and banks actively competing on mortgage rates. But this recovery remains fragile, and the Government had a prime opportunity during yesterday’s Spring Budget to stabilise this upward trajectory. Regrettably, this was an opportunity missed.
“The lack of a concrete decision from The Chancellor on stamp duty cuts has a very real potential to derail this newfound progress. This may wrongly and unnecessarily delay buying and selling decisions, as people are left holding out for a change that might come later in the year.”
Anthony Codling, MD, RBC Capital Markets, said: “Following the lackluster budget, it was heartening to see in the Halifax report today that average UK house prices rose by 0.4% MoM in February, up around £1,000, the fifth consecutive month that prices have risen. In our view and the picture from our own data sets is that the underlying health of the UK housing market is improving, so maybe the lack of housing market support in yesterday’s budget is not as disappointing as we first thought.
Nicky Stevenson, managing director at Fine & Country, said: “House prices ticked up for the second month of 2024, and activity in the property market is building up nicely in time for one of the busiest times of year.
“Mortgage approvals are at their highest levels since October 2022, suggesting there is pent-up demand from buyers who had been delaying a move.
“It will be interesting to see whether the Chancellor’s capital gains tax cut announcement in the Budget encourages teetering landlords to sell their properties.
“A rush of new listings would inject more energy into the housing market and may reignite demand from first-time buyers who have been struggling to afford a home in this high interest rate environment.
“With the base rate stuck at 5.25%, pricing realistically remains important, especially to sellers who want to move quickly.”
Jonathan Hopper, CEO of Garrington Property Finders, added: “The corner is being turned and the market is picking up speed.
“The Halifax’s data shows house prices have risen for five months in a row, though the annual pace of inflation slowed slightly compared to last month.
“While the supply of homes for sale is still limited in some areas, the market has finally become more free-flowing. ‘For sale’ signs are becoming an increasingly common sight, and we are seeing rising interest from both buyers and sellers.
“The falling prices of last year appear to be in the rear-view mirror, and many buyers who sat on their hands in 2023 are deciding that now is the time to strike, as the cost of borrowing comes down and before property prices start to accelerate back up.
“Yesterday’s Budget failed to deliver the tax break for first-time buyers that many had been hoping for.
“But the Chancellor’s speech did contain some very encouraging economic news. The OBR is now predicting that consumer inflation will dip below 2% within a few months – nearly a year sooner than it previously forecast – and this will increase the pressure on the Bank of England to start nudging interest rates down.
“Mortgage interest rates won’t return to their pre-Truss levels any time soon, but the market is approaching a sweet spot for buyers – a combination of more affordable homes and cheaper borrowing costs. The next few months could be busy all round for the property sector.”
