The UK’s housing market has stabilised at the start of 2023, the latest Halifax House Price Index has indicated, with the average price of a home remaining largely unchanged in January at £281,684.

This represents a marginal decrease from £281,713 in December, and followed a series of significant monthly falls in house prices at the end of last year, after they dropped by 1.3% in December and 2.4% in November.

Halifax’s data also highlighted that the pace of annual growth is continuing to slow, having decelerated from 2.1% in December to 1.9% in January, which is the lowest level recorded over the last three years.

The average UK house price is now 4.2% below its peak in August last year, which equates to around £12,500, although figures show it still remains £5,000 higher than in January 2022 (£276,483).

“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,” said director at Halifax Mortgages, Kim Kinnaird.

“As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.”

Halifax reported that the slowdown in annual house price inflation has been reflected in most nations and regions across the UK.

Wales, which recorded some of the strongest annual house price inflation over the last few years, saw its rate of growth fall to 2.0%, from 6.0% in December, with an average house price of £210,275 down from a peak of £224,210 in August.

The South West of England has also seen annual house price growth slow considerably, now at 2.7% compared to 6.0% in December, and has an average house price of £298,853, which has dipped below £300,000 for the first time since March last year.

London, which for some time has lagged many other areas of the UK in terms of house price growth, saw the cost of buying an average home fall from £541,472 to £530,396 in January, with annual house price inflation flat (0.0%) compared to 2.9% in December. According to Halifax’s data, the price of a typical London home is still around a quarter of a million pounds above the UK national average.

“For those looking to get on or up the housing ladder, confidence may improve beyond the near-term,” Kinnaird added. “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.”

Share Story: