UK Halifax house prices grew by 1.1% in February month-on-month, outpacing expectations for a drop of 0.3% and accelerating from January and December at 0.2% and -1.3% respectively. Year-on-year, house prices grew by 2.1%, also ahead of forecasts and unchanged for the third consecutive month. Annual growth slowed across all nations and regions in February.
London is still struggling, with average house prices dropping by 0.9% month-on-month, as increased working from home flexibility post Covid prompts more individuals and families to move outside the city in search for a bigger property with more space and a garden. A typical UK property price now stands at £285,476 versus £282,360 last month.
While annual house price growth remained steady, the monthly reading has been picking up in recent months, reflecting some improvements in the underlying drivers. Although mortgage rates are stuck at historically high levels, they have been coming down, helping to support demand for properties. Plus, the latest GfK consumer confidence reading hit the highest since April 2022, with sentiment starting to recover from the lows last September.
The market however is not yet out of the woods, with pressures from a weak economy, double-digit inflation, the cost-of-living crisis, and the potential for further rate hikes this year from the Bank of England. This morning’s Halifax reading is markedly different to the recent report from Nationwide which saw year-on-year house prices drop by 1.1% in February, the first annual fall since the height of the pandemic in June 2020. Nationwide and Halifax use different data sources and methods when constructing the index, based on their own mortgage approvals, which could help to explain the discrepancy.