The average UK house price edged up to a new record high of £276,759 in January, according to the latest Halifax House Price Index.

Halifax’s data suggested that house price growth had slowed at the start of the year, rising by just 0.3% in January, the smallest monthly increase since June 2021.

This followed four consecutive months of gains above 1%, while the annual rate of house price growth remained steady at 9.7%.

These latest figures mean that overall prices remain around £24,500 up on this time last year, and £37,500 higher than prices two years ago.

Halifax managing director, Russell Galley, commented that following the peak activity across the housing market in 2021, transaction volumes are now returning to “more normal levels”.

“Affordability remains at historically low levels as house price rises continue to outstrip earnings growth,” Galley said. “Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.

“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates. While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year.”

Hargreaves Lansdown senior personal finance analyst, Sarah Coles, added that the cost of living crisis has “put the brakes on runaway house price rises”.

“The Bank of England is committed to slow and steady interest rate rises through the year, so at the moment we don’t foresee the kind of rate shock that would send prices tumbling,” Coles commented. “However, we can expect monthly price rises to peter out, and annual rises to drop back as we go through 2022.

“If you need to buy a new home, there’s little point in trying to second-guessing market movements to time a purchase perfectly, because there are so many unknowns that make it impossible to identify the ideal moment to buy until it has passed. However, it’s worth considering carefully how affordable the move is after rate rises and bill hikes, so you deal with the really difficult questions before you commit.”

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