House price growth slows again, says Halifax, as mortgage crunch hits

The house price slowdown continued into the New Year, according to Britain’s biggest mortgage lender Halifax, as property inflation dipped to just 1.9 per cent.

House prices were flat over the month but property inflation dipped from 2.1 per cent in December and has tumbled from a peak of 12.5 per cent last summer, according to Halifax’s latest house price index.

Halifax warned that the property market would continue to suffer this year, as higher mortgage rates and the crunch on household budgets take their toll. 

The average house price in the UK now stands at £281,684, which is £5,000 higher than a year ago, but £12,308 less than the £293,992 August peak.

The average house in the UK now costs £281,684 according to Halifax

Kim Kinnaird, director, Halifax Mortgages, said: ‘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.’

Most UK regions saw a fall in growth. Wales, which has seen strong growth over the past few years saw its rate fall 4 per percentage points from to 2 per cent from 6 per cent last month. 

But London, which remains one of the country’s least affordable areas, saw its average house price fall £11,396 over the year.

Month on month prices remained flat but fell over the quarter 

Jeremy Leaf, north London estate agent and former RICS residential chairman, said: ‘Since the turn of the year, buyers and sellers have been slowly coming to terms with the changed environment. 

‘Buyers are negotiating hard, especially the considerable number who are largely equity-driven or not even dependent on mortgage finance so won’t show up in these figures.

‘Looking forward, we are anticipating small ups and downs in prices but no major correction, particularly now more stock is beginning to become available.’

In further good news for borrowers, mortgage rates have continued to fall since the start of the year despite the Bank of England’s base rate reaching 4 per cent, a 14 year high. 

And, while the rate is expected to rise further to a spring peak, analysts say rates will continue to fall after rising sharply in October last year.