House prices held steady in January

House prices remained steady in January with a 0% change on a monthly basis, according to the latest Halifax House Price Index.

On a quarterly basis house prices were down 3.6% but they are still some 1.9% higher than they were in January 2022.

Kim Kinnaird, director, 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.

“This followed a series of significant monthly falls at the end of last year (-1.3% in December and -2.4% in November).

“The pace of annual growth has continued to slow, to +1.9% (from +2.1% in December), which is the lowest level recorded over the last three years.

“The average house price is now around £12,500 (-4.2%) below its peak in August last year, though it still remains some £5,000 higher than in January 2022 (£276,483).

“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.

“For those looking to get on or up the housing ladder, confidence may improve beyond the near-term. 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.”

Our reaction:

Activity was far busier than expected in January given that buyers went into hibernation at the tail end of last year following the mini-Budget. This may explain why prices stayed flat rather than fell last month.

After a quiet first half of the month, once the schools returned buyers and sellers alike were back in touch and we started to see some pre-pandemic seasonality return to the market.

At the moment, discretionary buyers are staying at home but those with a compelling reason to move are active, albeit often with revised budgets given affordability due to higher rates and inflation.

Given the current level of buyer activity, we expect prices to hold and perhaps even increase marginally throughout the year. Last week’s base rate increase appears to have had little impact on buyers, and with mortgage rates continuing to trend downwards, albeit marginally, market confidence remains stable.