House prices reached a new record high in January, according to the latest Halifax House Price Index, despite annual growth slowing to 3%, the slowest rate seen since July.
The average price of a property in the UK now stands at £299,138 the bank said, with prices having risen by 0.7% in January, up from-0.2% in December.
Amanda Bryden, head of mortgages at Halifax, said; “Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s 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.”
Mortgage rates are likely to remain between 4% and 5% this year, the bank said, although the outlook for the property market appears positive. Ms Bryden said: “The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze.”
Lack of housing supply continues to be the biggest challenge facing the property market, with this likely to support property prices over the year.
Northern Ireland sees strongest price growth
There are major regional variations in house price growth across the UK, with Northern Ireland continuing to see the strongest annual growth.
Prices in Northern Ireland rose by 5.9% in January to an average of £205,473, although this was a lower than the 7.3% increase seen in December.
Scotland saw the lowest rise in house prices out of all UK countries, with prices up 2.4%, bringing the average price of a home there to £210,690. This compares to an increase of 3.6% in Wales.
In England, the North West saw the highest annual growth,with prices in this region up 5.2% compared to the previous year. However, the highest house prices in the UK continue to be in the capital, with the average price of a home in London now at £548,288, up 2.8% compared to last year.
