House prices stabilise in January following period of monthly falls

New data released by Halifax has suggested January brought “stability” to the market as house prices remained largely unchanged from December.

This follows consecutive monthly falls of -2.4% in November and -1.3% in December, according to Halifax. Annual price growth did, however, slow to +1.9%, down from +2.1% in December, marking the lowest level over the last three years.

Halifax say the average house price now sits at £281,684 compared with £281,713 in December. While this is around £12,500 (-4.2%) lower than August, it’s still £5,000 higher than January 2022. The bank added this trend is largely reflected in most regions across the UK.

“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,” said Kim Kinnaird, Director, Halifax Mortgages, continuing:

“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.”

Director of Benham and Reeves, Marc von Grundherr, said it was “quite remarkable” that the market has “remained largely impervious” to falling house prices, adding:

“With that storm now weathered and confidence returning to the market, the previous monthly house prices declines seen at the back end of last year have already amounted to little more than a seasonal cough and cold.”

A similarly optimistic sentiment came from Jason Ferrando, CEO of easyMoney:

“Despite last week’s further hike to interest rates, we’re simply not seeing the same level of market volatility that came during the latter stages of last year, particularly within the lending space.

So while buyers may be treading with a greater degree of caution, the vast majority are continuing to stride forward with intent. This consistent level of activity will ensure that the market remains in good health, albeit having seen marginal correction to property values.”

Discussing the potential way forward from here for the market, Anthony Codling, CEO, twindig, said:

“Homebuyer confidence will be key for the future trajectory of house prices if reductions in the rate of inflation accelerate and wage settlements start to come through the ‘feel good’ factor could return sooner than the bears think.

Spring […] will be a waiting game rather than a buoyant selling season with those that need to move moving, and those that want to move biding their time. Lower levels of activity – on both the demand and the supply side – will reduce the volatility of house prices. We expect to see a more normal market in the autumn.”

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