The housing market has built on a steady start to the year in February and conditions are gradually improving, according to the latest house price index from Halifax.
Although affordability remains a challenge for many, particularly those without financial support from family, the latest figures suggest the market has regained some momentum, Halifax head of mortgages Amanda Bryden said.
“There’s no doubt that affordability remains stretched, supply is constrained, and regional disparities persist,” Bryden continued.
“For those without family support, the path to home ownership feels particularly challenging.
“However, conditions have been gradually improving, with easing interest rates and real wage growth helping to support buyer confidence.”
Average prices rose by 0.3% in February, with annual growth at 1.3% – the strongest rate for four months. Average prices have increased by around £3,000 since the start of the year, with a typical property now costing £301,151.
Regional disparities remain, with a clear split between stronger growth in the north and softer conditions in the south.
In Northern Ireland average prices are up 6.3% over the past year to £218,608. Scotland also recorded strong growth, rising 4.7% annually to an average price of £222,286. Wales saw a more modest increase of 2.4% on annual basis, taking the typical home value to £231,637.
Within England, stronger price growth remains concentrated in northern regions. In the North East, prices rose by 3.5% over the year to £181,838, while the North West recorded annual growth of 2.9% taking the average home to £246,292.
In the more expensive southern markets, prices continue to ease. In the South East prices are down 2.2% year‑on‑year to £383,834, while London saw average values fall by 1.0% to £538,200.
“Looking ahead, geopolitical uncertainties seem set to influence the outlook for inflation and the wider economy,” Bryden said. “Against that backdrop, markets are now anticipating a more gradual path for interest‑rate reductions. If realised, the speed at which borrowing costs ease may be tempered.”
Many commentators agreed the global political climate will have an impact on the UK housing market.
“Six interest rate reductions in the past 19 months have been hugely important for the housing market, easing buyer affordability, encouraging activity and boosting confidence,” said Jason Tebb, president of OnTheMarket.
“The narrow vote at the Monetary Policy Committee’s meeting in January raised hopes that another reduction in base rate might come this month but the rate setters may feel this needs to be pushed back for now as conflict in the Middle East creates uncertainty with regard to energy prices and inflation.”
“There is no question some buyers and sellers have been pressing the pause button since war in the Middle East began,” north London estate agent and former RICS residential chairman Jeremy Leaf said. “We expect that button will be pushed a little harder if it seems likely uncertainties over interest rates and inflation persist for much more than a few weeks.
“Until the end of February, activity had picked up steadily as seen in these and other housing market figures although inevitably some of that improvement may now begin to slowly unwind. Either way, the availability of stock, particularly from landlords exiting the rental sector, and underlying worries about the economy, mean prices stay subdued and transaction times lengthen.”
“Although the spring statement did little to upset the market in the same way as November’s Budget did, since then the conflict in the Middle East has lifted energy prices and shrunk central bank rate cut expectations,” Mark Harris, chief executive of mortgage broker SPF Private Clients, said.
“Swap rates, which underpin the pricing of fixed-rate mortgages, have edged higher amid fears that rising prices will fuel inflation. Expectations of a near-term base rate cut, perhaps as early as this month, have substantially reduced.”
However, others remain confident in the ongoing resilience of buyers.
“The market saw a bit of a bounce at the end of last year and into this one once the budget was out of the way. This data shows that people are feeling more confident and the market is in a better place than this time last year,” said Tomer Aboody, director of specialist lender MT Finance.
“Further interest rate cuts will help buyers and encourage activity. However, people are already coming to the conclusion that they either buy in this market or wait but there is only so long people can put off decisions before they simply have to move because of their situation. Many have been waiting for so long, and can see no government assistance on the horizon in the form of stamp duty reform etc, so are taking the plunge regardless.”
According to Iain McKenzie, CEO of The Guild of Property Professionals, the figures suggest a steady build in momentum.
“Importantly, price growth is being balanced by a healthier level of supply, with around 6% more homes on the market than a year ago. This is helping to keep values in check and is creating a more sustainable environment for buyers and sellers alike.
“The broader outlook is also improving. Mortgage rates have been gradually easing, with the average five-year fixed rate dipping below 4% for the first time in several years, while lenders are beginning to offer greater borrowing flexibility. Combined with expectations that the Bank of England may reduce the base rate further in the coming months, affordability should continue to improve through 2026.
“Although mortgage approvals dipped earlier in the year, more recent indicators, such as strong sales agreed figures and positive sentiment from surveyors, point to a market that remains resilient and is gradually regaining confidence. With spring traditionally the busiest time for listings and completions, the coming months should provide a clearer picture, but the foundations are certainly in place for steady, sustainable growth as the year progresses.”
