UK house prices rose for the fifth month straight in February, as buyers bet that mortgage rates will drop.
The typical price of a home is now £291,699, Halifax said, only £1,800 off the all-time high seen in June 2022.
The Halifax House Price Index showed a 1.7% year-on-year rise in UK house prices in February, slowing from 2.3% in January.
Month on month, the index added 0.4% compared to 1.2% the previous month.
Prospective buyers are being encouraged by easing mortgage costs and a rosier economic outlook but the lender warned that there is uncertainty on the horizon.
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Kim Kinnaird, director at Halifax Mortgages, said: “Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading.
“Raising a deposit and affording a mortgage remains challenging, especially for first-time buyers, so there could be a slowdown in the housing market this year.”
Regionally, Northern Ireland showed the strongest growth, with house prices rising by 5% annually to an average of £195,956.
The North West, North East, and Wales also saw significant increases.
London’s average house price remains the highest at £536,996, marking a 1.5% annual increase, the first positive growth since January 2023.
Eastern England experienced the most considerable decline last month with an average price drop of 0.8%.
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The increase in prices last month was nonetheless the weakest reading since September, underlining the headwinds continuing to face the housing market.
Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “In order to persuade more people this is the year to sell their home, the Bank of England should start considering reducing interest rates to ease borrowing costs for aspiring homeowners.”
Tom Bill, head of UK residential research at estate agent Knight Frank, said: “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.”
Watch: UK house prices creep up as experts predict ‘smoother year’ for buyers and sellers
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