House prices hit £299,000 record high ...Middle East

UK house prices hit a new record high, according to mortgage lender Halifax with average property now costing £299,138, new data showed.

Prices rose 0.7 per cent in the month following a drop of 0.2 per cent in December. They rose 3 per cent on an annual basis as buyers rushed to take advantage of the stamp duty tax break before it expires, the mortgage lender said.

The record prices come after the Bank of England cut interest rates and signalled more are on the way. Experts say the latest rate cut could fuel further demand with several major lenders already repricing their mortgage offers.

Amanda Bryden, head of mortgages, Halifax, said the housing market had started 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. 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.

“Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market.

“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.

“As things stand, mortgage rates are likely to hover between 4 per cent and 5 per cent in 2025, influenced by both global financial markets and domestic monetary policy.

“Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1 per cent.”

She said a lack of supply remined the key issue in the housing market. “This long-term trend, coupled with a gradual improvement in affordability, should support further modest house price growth this year,” she said.

Halifax found that Northern Ireland continues to have the strongest annual property annual price growth in the UK, at 5.9 per cent last month but prices slowed from December’s 7.3 per cent increase. Properties in Northern Ireland now cost an average of £205,473.

Houses in Wales were up 3.6 per cent on January 2024 with properties now costing an average of £227,397. Scotland saw the lowest UK house price increases at 2.4 per cent with houses worth an average of £210,690.

North east England overtook the north-west as the region with the strongest annual property price growth, rising 5.2 per cent with properties now costing anaverage £178,696.

London remains the highest average house price in the UK, at £548,288, up 2.8 per cent compared to January 2024.

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, said: “Easing inflation and two interest cuts last year – plus a third yesterday – are helping to spur demand, particularly among first-time buyers who currently consider now a good time to buy. 

“The impending change in stamp duty land tax thresholds has been a motivating factor for aspiring homeowners, who currently pay no property tax on properties costing up to £425,000. 

“Existing homeowners considering a move can also benefit from lower property tax charges provided they complete their deal before the end of March. At that point the temporary stamp duty relief reverts to the previous, higher levels though some first-time buyers appear determined to push ahead with purchases, despite the tax break change, to take advantage of better affordability conditions.”

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