House prices rose for the fifth month in a row in February as would-be buyers were tempted off the sidelines by cheaper mortgages.
On average, prices rose by 0.4 per cent last month compared with January, according to Halifax. The high street lender estimates that the average house price in the UK is now £291,669, 1.7 per cent higher than at this time last year.
“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,” Kim Kinnaird, director of Halifax Mortgages, said.
Halifax’s latest measure of house prices tallies with Nationwide’s reading last week, which estimated that prices had risen by 0.7 per cent in February. Nationwide thinks that prices have not fallen since last August.
However, economists believe that the housing market’s recovery could be running out of steam already. The rise last month was the smallest that Halifax had recorded since September, suggesting that “the boost to house prices from the decline in mortgage rates since last summer is over”, according to Andrew Wishart, senior property economist at Capital Economics, the consultancy.
“With mortgage rates now edging up, house prices are likely to lose momentum in the near term.” Kinnaird agreed that it “remains a possibility that there could be a slowdown in the housing market this year.
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.” Halifax’s data shows that prices have risen most rapidly in Northern Ireland, where they are up by 5 per cent over the past year.
Prices in the northwest of England are 4.4 per cent higher they were than 12 months ago and prices in Wales have risen by 4.1 per cent. In London, the most expensive part of the country to buy a home, prices have increased by 1.5 per cent over the past year, the first positive annual reading in the capital since the start of 2023. Prices in eastern England have been under the most pressure, slipping by 0.8 per cent over the period.
It has been a volatile few years for house prices. They rose sharply during the pandemic amid a lockdown induced “race for space” and the stamp duty holiday. The market came to a standstill, however, in the autumn of 2022 immediately after Kwasi Kwarteng’s mini-budget, which sent mortgage rates spiraling.
The decline has not been as steep as many had predicted and Halifax thinks that prices are now less than 1 per cent below their June 2022 peak. With employment low, there have been few forced sellers and a shortage of homes on the market has propped up prices, even though demand has been subdued.
Source: The Times