The UK housing market has shown remarkable resilience, defying predictions of a crash in 2023-2024. In the face of rising interest rates, Halifax’s latest data revealed a fourth consecutive monthly rise in the market, indicating a positive start to 2024. This surge has propelled the average house price to £291,029, marking a substantial increase of £3,924 from December 2023. For potential investors eyeing the market, this unexpected trend could offer promising opportunities.
POSITIVE TRENDS AMIDST COMPETITION
Halifax reports a noteworthy 1.3% rise in the average UK house price in January, with the highest annual growth rate in a year at 2.5%. We can attribute this positive trend to reduced mortgage rates, fading inflationary pressures and a resilient labour market. January also witnessed an industry-wide ‘price war’ characterised by aggressive mortgage rate cuts, stimulating buyer confidence and intensifying competition among lenders.
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MARKET OPTIMISM AND REGIONAL VARIATIONS
Contrary to earlier projections of a housing market crash, we’re observing a significant rebound in activity levels. The surge in inquiries from buyers, buoyed by growing confidence in medium-term mortgage rates, has rendered predictions of a house price crash highly unlikely. This positive momentum extends to regional dynamics, where despite a 0.4% fall in London’s annual average house price to £529,528, Northern Ireland leads with a 5.3% increase, emphasising the impact of regional variations on the market’s overall performance.
ANTICIPATING CHANGES AND CAUTIOUS OPTIMISM
The potential downward move in interest rates by the Bank of England is viewed as a positive factor for the housing market. BoE Deputy Governor Sarah Breeden, expressing confidence in the economic forecast, stated, “As I have become more confident that persistence is likely to evolve as embodied within our forecast, I have become less concerned that rates might need to be tightened further.” Despite this positive outlook, we should acknowledge affordability challenges and emphasise caution against ruling out further modest price falls. Broader economic uncertainty remains a factor influencing the market outlook, signalling a need for cautious optimism.
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