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House Prices Witness Significant Jump in January, Sparking Market Optimism

The UK housing market experienced a notable uplift in January, marking the fourth consecutive month of price increases, with an annual growth rate hitting its highest in a year. The average house price reached £291,029, an increase of £3,924 from December, according to Halifax.

Northern Ireland led the pack with a robust annual growth of 5.3%, contrasting with the South East, which saw a decline of 2.3%. This month-to-month growth of 1.3% signifies a continued positive trend, with Halifax reporting a 2.5% rise on an annual basis, the most significant since January of the previous year.

Halifax has published its house price index for January: january-2024-halifax-house-price-index.pdf.

Kim Kinnaird, Director of Halifax Mortgages, commented on the trend: “The average house price in January was £291,029, up +1.3% or, in cash terms, £3,924 compared to December 2023. This marks the fourth consecutive month of price increases, pushing the annual growth rate to +2.5%, the highest since last January. Factors such as the recent decrease in mortgage rates, diminishing inflationary pressures, and a resilient labour market have boosted confidence among buyers and sellers, contributing to a positive start for the 2024 housing market.”

However, Kinnaird also pointed out the challenges ahead: “Interest rates remain higher than the historic lows of recent years, and the demand continues to outstrip supply. With the average deposit for first-time buyers now at £53,414, it’s unsurprising that almost two-thirds of new buyers are purchasing in joint names. The road ahead might still present affordability challenges and potential modest falls in house prices amidst broader economic uncertainties.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, offered further insights: “The start of 2024 has seen a surge in the property market, spurred by falling mortgage rates. However, this uptick may not signal a market turnaround, as the possibility of a slowdown remains. Despite this, the drop in mortgage rates through January and the slight increase after the Bank of England’s caution suggest the trend could continue to favor buyers in the upcoming months.”

Nathan Emerson, CEO at Propertymark, added: “The gradual increase in house prices, particularly as borrowing costs rise, is encouraging. The Bank of England’s decision to hold interest rates has likely bolstered buyer confidence for making moves in 2024. A gradual reduction in interest rates by the Bank would further aid market growth.”

The beginning of the year has undoubtedly brought a wave of optimism to the UK housing market, yet experts caution that the overall outlook remains uncertain, with potential challenges looming later in 2024.