UK house prices reached a new record average high in January of nearly £300,000, according to Halifax.
The average property price was £299,138 as house prices increased by 0.7 per cent month-on-month and three per cent annually.
While house prices may have increased, year-on-year growth was at three per cent, which is the slowest rate since July 2024.
This growth shows recovery following a market-wide decrease in December, as house prices fell by 0.2 per cent.
Halifax’s head of mortgages, Amanda Bryden, said this was a “positive note” as average prices “more than” recovered from the slight dip in December.
She added: “Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy.”
Ms Bryden remarked there was a “strong demand” for new mortgages and growth in lending.
“With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March,” she said.
“Despite geopolitical uncertainties and waning consumer confidence, other key indicators look fairly positive for the housing market.”
Ms Bryden cited the Bank of England’s first base rate cut of the year to 4.5 per cent and the expectation that household earnings will continue to beat inflation as signs the financial pressure from the cost-of-living squeeze was easing up.
She predicted mortgage rates would hover between four per cent and five per cent in 2025, “influenced by both global financial markets and domestic monetary policy”.
She added: “Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%.”
Ms Bryden said the fundamental issue remained a lack of supply within the housing market, but along with a “gradual improvement in affordability”, she predicted a modest house price growth over the year.
In regional terms London remains the most expensive, while the northeast of England replaced the northwest as the region with the strongest annual price growth.
The Bank of England cut interest rates to their lowest in the UK since mid-June 2023.
Iain McKenzie, chief executive of the Guild of Property Professionals, said the decision to cut the interest rate would “further improve affordability, widening the buyer pool and sustaining price growth to some degree”.
He added: “However, realistic pricing remains key, as many properties are still selling below asking price. While market conditions are strengthening, sellers should remain mindful of pricing strategies to secure deals in this evolving landscape.”
While mortgage rates are predicted to remain stable, Mark Harris, chief executive of mortgage broker SPF Private Clients, said that swap rates, used by lenders to price mortgages, continue to decrease.
He added some lenders were “dropping their mortgage rates, in part reversing recent increases”.
“The latest rate cut was largely expected by the markets and has been factored into pricing already, but a continual decline in swaps would enable lenders to price more keenly, easing borrowers’ affordability concerns,” he said.
