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The average UK house price rose more than expected in January to a new record, boosted by the approaching end of a property tax break and demonstrating resilience in the face of strained affordability, according to mortgage lender Halifax.
House prices rose 0.7 per cent in the month after a dip of 0.2 per cent in December, taking the average property price to £299,138 according to new data on Friday.
The rise was much stronger than the 0.2 per cent growth expected by economists polled by Reuters.
However, annual growth in prices eased slightly to 3 per cent, down from 3.4 per cent in the previous month.
Amanda Bryden, head of mortgages at Halifax, said the UK housing market had “started the year on a positive note”.
“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,” she said, adding that some first-time buyers might have been eager to complete purchases before a rise in stamp duty at the end of March.
From April, among other changes, first-time buyers will start paying stamp duty on properties costing £300,000 or more, down from the current threshold of £425,000. This comes with the end of a temporary stamp duty holiday introduced in October’s Budget.
Bryden said despite geopolitical uncertainties and waning consumer confidence, the property market had been supported by recent cuts in interest rates and by wages rising faster than inflation.
On Thursday, the Bank of England cut its policy interest rate by a quarter of a percentage point to 4.5 per cent, the lowest level since June 2023. It was the third cut since August last year.
BoE deputy governor Dave Ramsden said the gradual reduction in rates was feeding through into mortgage rates, supporting demand.
“We think that the housing market is picking up,” he told reporters after Thursday’s cut.
While still well below their peak in the summer of 2023, mortgage rates ticked up at the end of last year and remain higher than in 2021, before the BoE started raising borrowing costs from historical lows.
Friday’s figures contrast with separate data from mortgage lender Nationwide, which showed house prices rising only 0.1 per cent in January, a slowing of the growth rate.
Halifax has a larger sample than Nationwide, with about 15,000 transactions compared with 12,000, and a focus on northern regions that can generate short-term differences.
However, both Nationwide and Halifax show that house prices surged during the pandemic, then fell as mortgage rates rose over the past two years and then recovered in 2024.
In January, the average house price was 25 per cent higher than in February 2020, before the pandemic, according to Halifax.
The lender said Northern Ireland continued to have the UK’s strongest annual property price growth, though at 5.9 per cent in January this had eased from 7.3 per cent in December.
London retained the highest average house price in the UK, at £548,288, up 2.8 per cent from a year earlier.
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