UK House Prices Rise for Fifth Consecutive Month, Confirming Rebound from 2023 Slump

UK House Prices Continue to Rise for Fifth Consecutive Month, Boosting Confidence in Housing Market

In a reassuring sign of economic recovery, UK house prices have risen for the fifth consecutive month in February. According to Halifax, the average value of a home increased by 0.4% from January to reach £291,699, leaving values 1.7% higher than they were a year prior.

This upward trend signifies a turnaround from the housing market slump experienced in 2023, with prospective buyers feeling more confident due to easing mortgage costs and a brighter economic outlook. The recent upgrade in the housing market outlook by the UK fiscal watchdog, fueled by anticipated interest rate cuts from the Bank of England, has further bolstered consumer optimism.

While prices have decreased by 0.6% nationwide from their peak in mid-2022, London saw a notable 1.5% increase in house prices from a year ago, marking the first annual growth in twelve months. The positive figures reported by Halifax are also supported by data from Nationwide Building Society and the Bank of England’s lending figures.

However, despite the recent improvements, challenges persist in the housing market, with Halifax noting that the February increase was the weakest reading since September. Kim Kinnaird, director at Halifax Mortgages, emphasized the ongoing difficulties of raising a deposit and affording a mortgage, particularly for first-time buyers.

Mortgage rates have decreased from last summer’s highs but remain above pre-BOE hiking cycle levels, with recent increases as investors adjust their expectations on rate cuts. UK Chancellor Jeremy Hunt’s recent Budget included measures aimed at boosting housing supply, such as reducing capital gains tax on residential sales and eliminating tax breaks for second home rentals.

While the housing market recovery remains fragile, the missed opportunity in the Spring Budget to stabilize the trajectory is a cause for disappointment, according to Sam Mitchell, CEO of Purplebricks. As consumers navigate the complexities of the market, the road to sustainable growth in the housing sector may require further support and intervention.