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UK House Prices Reflect Resilience with Third Consecutive Monthly Increase

January 12, 2024

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uk property investment

Article Summary

Buy - to - let
  • According to Halifax, the nation's largest mortgage lender, property prices experienced a commendable 1.1% growth in December, following a 0.6% rise in November and a 1.2% increase in October.
  • This encouraging trend is particularly noteworthy as it represents the first instance of annual growth in the UK housing market reported by Halifax in eight months, with prices up by 1.7% year on year in December.
  • Mortgage approvals for house purchases also exhibited a positive trend, rising to 50,100 in November from 47,900 in October, indicating a strengthening demand.

Introduction

In a surprising turn of events, UK house prices have seen a positive trajectory for the third consecutive month, demonstrating resilience despite earlier forecasts of a downturn. According to Halifax, the nation’s largest mortgage lender, property prices experienced a commendable 1.1% growth in December, following a 0.6% rise in November and a 1.2% increase in October. The average UK home is now valued at £287,105, marking a £3,000 increase from November.

This encouraging trend is particularly noteworthy as it represents the first instance of annual growth in the UK housing market reported by Halifax in eight months, with prices up by 1.7% year on year in December. Marc von Grundherr, a director of the London estate agency Benham and Reeves, describes this as a “Christmas miracle” amidst the challenges of the past year.

While the growth has been attributed to a shortage of properties on the market rather than robust buyer demand, there is optimism in the air. Halifax’s Director of Mortgages, Kim Kinnaird, noted that the easing of mortgage rates could potentially boost buyer confidence in the coming months.

Mortgage approvals for house purchases also exhibited a positive trend, rising to 50,100 in November from 47,900 in October, indicating a strengthening demand. Despite this positive momentum, analysts at Goldman Sachs caution that UK homeowners might face a £19 billion increase in mortgage costs as fixed-rate deals expire, potentially putting strain on household finances.

Halifax, while acknowledging the recent positive growth, maintains a cautious outlook, expecting house prices to decline by up to 4% this year due to high-interest rates and inflation affecting mortgage affordability. The lender projects a reduction of 2% to 4% in the price of an average UK property in 2024.

Jonathan Hopper, the chief executive of Garrington Property Finders, sees this as a turning point, stating, “We should be wary of reading too much into a couple of months of positive price data, but there is a growing perception on the property front line that things are turning a corner.”

In summary, despite earlier predictions of a downturn, the recent positive growth in UK house prices, coupled with increasing mortgage approvals, paints a more resilient and hopeful picture for the property market. Investors and potential buyers may find this encouraging as the market navigates through the uncertainties of 2024.

Conclusion

In summary, despite earlier predictions of a downturn, the recent positive growth in UK house prices, coupled with increasing mortgage approvals, paints a more resilient and hopeful picture for the property market. Investors and potential buyers may find this encouraging as the market navigates through the uncertainties of 2024.

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