Halifax, the UK’s biggest mortgage provider, has proclaimed a tipping point in UK housing. Overall, for the first time ever, UK average house prices have exceeded £300,000, reaching £300,077. This is a significant jump of 0.7% over last month. It further reflects an increase of 1% versus one year ago.
In December the average price of a house was £297,938. According to new data, that’s quite the positive narrative shift in the housing market. Amanda Bryden, director of mortgages at Halifax, says the market is starting the year on “solid ground.”
According to Halifax, it expects property prices to only rise by 1% to 3% over the course of this year. This projection relies on a mix of increasing wages and constant business growth. Bryden mentioned that wages have been growing faster than property prices since late 2022, which has “steadily improved underlying affordability.”
While these trends bode well for existing homeowners, the jump presents a challenge for would-be first-time buyers, experts cautioned today. Karen Noye, a mortgage expert, stated that while this milestone may benefit existing homeowners, it represents “yet another nail in the coffin for first-time buyers already battling stretched affordability.”
This was followed by a noted drop in mortgage rates earlier this month. These rates are really high compared to the ultra-low world we inhabited over the last decade. Bryden acknowledged this shift, stating, “We’re now seeing more mortgage deals below 4%. If inflation continues to ease, there should be further gradual reductions as the year goes on.” She asserted that this development would lead to a more sustainable market going forward.
Noye further elaborated on the current market conditions: “Stability has returned, but enthusiasm has not and that is likely to keep price growth contained over the months ahead.” When it comes to support for affordability, she forecasted that the numbers would rise slowly over time. That doesn’t mean we should be looking for a big jump in price.
Halifax’s numbers are significantly higher than most other indices, indicating a very strong housing market. In January 2006, the average house price was around £168,982. This illustration is a striking reminder of the incredible transformation that has taken place over the last 19 years.
With lenders desperate to attract first-time buyers through the door by launching products that ask for lower deposits, there is reason for optimism among would-be homeowners. Noye’s observation was an excellent one. True, some of these prices will settle down, but continued low availability will produce considerable appreciation in places with constrained inventory and homes selling for economic fundamentals.
“That’s a positive trend for buyers, and the long-term health of the market.” – Amanda Bryden
