Annual house price growth static for third consecutive month

The annual rate of house price growth remained flat during February at +2.1% for the third month in a row, showing further signs that the stability we were used to pre-pandemic is returning, according to the latest market analysis by Halifax.

Related topics:  Property,  House Prices,  Halifax
Property | Reporter
7th March 2023
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"The UK housing market appears near the end of a long hangover from the mini-Budget rather than on the verge of a price plunge"

This morning's data shows that a typical UK property now costs £285,476 - up from £282,360 last month. Average house prices in London are now £526,842, a 0.9% fall from January’s £530,416. London may be affected by its large proportion of flats – prices for which have broadly stagnated. Despite this slowdown, homes in London still cost over £240,000 more than the UK national average.

Annual growth reduced most significantly in the North East, at 1.1% in February vs a rise of 3.6% in January, with homes now costing an average of £163,953.

Annual growth fell the least in Scotland. House prices in the nation are now an average of £198,779 (a growth rate of 2.2%, vs 2.3% in January.) Similarly in Wales, annual growth in February was 1.2% (vs 1.9% in January), with homes costing £210,917, on average. Those purchasing a home in Northern Ireland will now pay £185,009, on average, an annual growth rate of 5.7% (vs 7.0% in January.)

Kim Kinnaird, Director, Halifax Mortgages, said: “The average house price in February was £285,476, 2.1% up on this time last year, and has been stable over the last three months.

“When comparing to January, there was a 1.1% increase in house prices through the month of February, although overall prices are flat compared to three months ago. Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December. Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend.

“In cash terms, house prices are down around £8,500 (-2.9%) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic. With average house prices remaining high housing affordability will continue to feel challenging for many buyers.”

Nathan Emerson, Chief Executive of Propertymark, said: "Year on year, estate agents across the UK have seen a small drop in the number of sales being agreed whilst the number of new properties coming to market has remained the same.

"Increases to interest rates have caused buyers to rethink their budget and haggle on price, but the drive evidently still remains to see their purchase through and move home."

Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market appears near the end of a long hangover from the mini-Budget rather than on the verge of a price plunge. Activity stopped well before Christmas due to the mortgage market turmoil but has picked up this year as people come to terms with where rates are settling.

"That said, asking prices are likely to come under more pressure as we enter the traditionally busier spring market due to tighter affordability. We expect around half of the 20% increase seen during the pandemic to unwind but most evidence that is not backwards-looking points to a stronger market than expected.”

Iain Crawford, CEO of Alliance Fund, commented: “House prices appear to have stabilised at a far quicker pace than anticipated, following the string of significant downward monthly corrections caused by the turbulence of last September’s mini-budget.

This suggests that the nation’s homebuyers and sellers are coming to terms with the new normal of higher interest rates and are continuing to transact at this new middle ground, having adjusted their position in the market accordingly.

However, we're certainly not out of the woods yet and while the current outlook is a more positive one, the wider economic landscape and the current cost of living crisis will continue to have an influence.

As a result, we can expect a slower market in comparison to previous years, although the potential for any significant correction to house prices is looking increasingly less likely as the days go by.”

Jason Ferrando, CEO of easyMoney, says: “The property market has put in a fairly resilient display so far this year and we’re yet to see house prices plummet, putting previous predictions of a market crash to bed for the time being.

"However, a shot in the arm in some shape or form isn’t out of the question and the government may choose to deliver this by incentivising buyers via the spring statement at the end of the month.

"As it stands, there doesn’t seem to be any direct focus on housing on the agenda, but a curve ball certainly isn’t out of the question and boosting market health by fuelling demand is a hand we’ve seen the government play on countless occasions.”

Marc von Grundherr, Director of Benham and Reeves, commented: “Although previous reports of housing market health have been less than positive, those of us on the ground are privy to changes in market sentiment far sooner than the reporting of topline statistics allows.

"While current house price performance may remain sluggish when compared to the meteoric rates of the pandemic market boom, there’s been a notable uptick in activity in 2023 and this has reversed the rot seen during the back end of last year.

"Yes, we expect the market to move forward at a more measured pace over the year ahead, but what we simply aren’t seeing is an exodus of buyers forcing sellers to dramatically reduce prices, bringing the market to its knees in the process.”

James Forrester, Managing Director of Barrows and Forrester, commented: “The housing market continues to stand firm in 2023 and the general economic outlook is far more positive than anticipated. So we can expect that the property market itself will be largely overlooked in this month's spring statement, particularly given the fact that house prices have stabilised in recent months.

"That said, any help afforded to households to help combat the cost of living crisis should have a spillover effect, boosting market sentiment and ensuring that any notable market downturn is avoided.”

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