UK House Prices Stabilised in January, Halifax Figures Show

Rows of houses in Hastings, England, on Aug. 5, 2020. (Dan Kitwood/Getty Images)

House prices in the UK stabilised in January following a series of monthly falls last year, according to new figures from the Halifax bank.

Halifax said the typical property value remained largely unchanged in January 2023 at £281,684, compared with December 2022.

The bank’s House Price Index (pdf) recorded 0.0 percent house price growth in January month-on-month, following monthly decreases of 1.3 percent in December and 2.4 percent in November.

Property values increased by 1.9 percent annually, the lowest level recorded over the past three years.

The average house price is now more than £12,000 below a peak seen in August last year, which was £293,992.

Kim Kinnaird, director of Halifax Mortgages, said, “The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January at £281,684, a very small decrease on December.”

Nicky Stevenson, managing director at estate agent group Fine & Country, said, “A month without a fall in house prices brings some much-needed stability to the property market, and will likely encourage more sellers to put their homes up for sale ahead of the traditionally busy springtime.”

Market Slowdown

Annual house price growth has slowed down in most nations and regions across the UK, according to Halifax.

The annual rate of house price growth in Wales slowed from 6.0 percent in December to 2.0 percent in January, with a new average house price there of £210,275, down by nearly £14,000 from a peak of £224,210 in August.

The southwest of England has also seen annual house price growth slow considerably, to 2.7 percent in January compared with 6.0 percent in December.

The average house price in the southwest has dipped below £300,000 for the first time since March last year.

In Northern Ireland and Scotland the pace of annual growth has eased more slowly, Halifax said.

In Northern Ireland, annual house price growth eased from 7.1 percent in December to 6.9 percent in January and in Scotland it slowed from 3.3 percent in December to 2.4 percent in January.

In London, house prices stalled in January, with 0.0 percent growth, compared with a 2.9 percent increase in December.

Kinnaird said: “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. As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.”

But she said “confidence may improve beyond the near-term” for those looking to get on or up the housing ladder, adding, “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.”

‘Light at the End of the Tunnel’

The mortgage rates offered by lenders jumped following the “mini-budget” adopted by former Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng in September.

Their plan to fund a £45 billion package of tax cuts with government borrowing instead of spending cuts led to fears of unsustainable government debt levels. The ensuing turmoil in the financial markets caused the pound to fall steeply against the dollar and led to an increase in borrowing costs for both the government and British households.

A view of the Bank of England in London, on Feb. 2, 2023. (Yui Mok/PA Media)

The Bank of England, the UK’s central bank, has been raising interest rates for months in an effort to rein in soaring inflation, which remains near a 40-year high. Last week, the bank raised rates for the 10th time in a row, hiking the base rate from 3.5 to 4 percent.

But mortgage rates have been falling marginally recently, leading to hopes that there is light at the end of the tunnel.

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Some discretionary demand has disappeared but most buyers need to move and have accepted the fact that a 13-year period of ultra-low rates is over. As budgets adjust to higher rates, we think prices will fall by 5 percent this year but offers are still exceeding the asking price in some areas.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “There is encouraging news on the mortgage front with fixed-rate pricing continuing to edge downwards.

“While the days of sub-1 percent fixes are long gone, rates are beginning to look more palatable for borrowers, which should be a welcome boost for the housing market and encourage more to take the plunge.”

Steven Morris, director at Bristol-based mortgage broker, Advantage Financial Solutions, said: “Though the property market is still under pressure, the fixed-rate mortgage price war currently raging and the fact prices were flat in January shows there’s light at the end of the tunnel. Every time we apply for a fixed-rate for a customer, within no time it’s cheaper elsewhere.”

PA Media contributed to this report.