LATEST: Homes now worth £24,500 more than a year ago, on average

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Price growth slowed to +0.3% in January – the lowest rise since last summer – although it was enough to push the average house price to a record high of £276,759.

The Halifax House Price Index reveals that the annual rate of growth remains steady at 9.7%, putting overall prices about £24,500 up on this time last year, and £37,500 higher than two years ago.

The lender also reports that transaction volumes are returning to more normal levels.

Wales was by far the strongest performing nation, with annual house price inflation of 13.9%, where the average house price fell slightly to £205,253. In England, the North West was again the strongest performing region, up 12% year-on-year, with an average house price of £213,200.

Although London remains the weakest performing area, annual house price inflation increased for a third straight month to 4.5% – its strongest performance in more than a year.

Deposit pressure

Halifax warns that the pressure on deposit requirements will become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living and rises in interest rates begin to feed through to mortgage rates.

Twindig CEO Anthony Codling agrees and says: “Deposits will be key to the level of house price inflation this year. Those with a big deposit will be able to rise above the living and mortgage cost rises, those without will not and unfortunately, the deposit poor will also find it harder to save as living costs rise.”

Property portal OnTheMarket.com CEO Jason Tebb adds that it’s not clear whether last week’s interest rate rise will impact buyer confidence, particularly given greater pressure on budgets from an increase in the cost of living.

He says: “With mortgage rates still comparatively cheap and many on fixed-rate products, positive sentiment should prevail for now although it’s possible that the growth in average prices may continue to slow over the next few months.” 

Tom Bill, head of UK residential research at Knight Frank, believes supply will pick up as more owners decide now is the time to act.

“A number of prospective sellers had hesitated due to the distortive effect of a stamp duty holiday and a global pandemic,” he says.

“This year could see high demand more evenly matched by supply, which would mean UK house price growth ends 2022 in single-digits.”

Read more house price news.

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