"With inflation heading in the right direction, a rate cut will give the housing market a welcome boost."
- Mark Harris, chief executive of mortgage broker SPF Private Clients
Annual UK house price inflation was -0.6% in the 12 months to January, compared with -2.2% in the 12 months to December 2023, according to the latest UK House Price Index from the Land Registry.
The average UK house price was £282,000 in January, which is £2,000 lower than 12 months ago. However, prices increased by 0.5% between December and January, compared with a decrease of 1.1% during the same period 12 months ago. On a seasonally adjusted basis, average house prices in the UK increased by 1.1% between December and January.
At the country level, the highest annual change in the 12 months to January was recorded in Scotland, where house prices increased by 4.8%.
England saw average house prices decrease by 1.5% in the 12 months to January, while Wales saw prices decrease by 0.8% and Northern Ireland saw prices increase by 1.4%.
Of the English regions, annual house price inflation was highest in the North West, where prices increased by 1.0%. London was the English region with the lowest annual inflation, where prices decreased by 3.9%.
Richard Harrison, had of mortgages at Atom Bank, commented: “There are signs that house price falls are starting to slow, with January’s figures from the Office for National Statistics (ONS) showing house prices fell by just 0.6% in the twelve months to January.
"Ongoing economic pressures and affordability constraints at the start of the year meant that buyer confidence did not fully return to the housing market.
"Looking ahead, while the jury is still out on whether we will see further house prices fall in Q2, the news last week that the UK economy returned to growth in January should in part help boost buyer confidence. News this morning that inflation is falling faster than expected will also be well received, increasing expectations of base rate cuts and lower mortgage rates.
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “With inflation falling to 3.4%, it’s time for the Bank of England to be bold and start cutting interest rates. With inflation heading in the right direction, a rate cut will give the housing market a welcome boost.
“Falling interest rates will have a knock-on effect on Swap rates, which underpin the pricing of fixed-rate mortgages. Five-year Swap rates fell this morning to 3.90% from 3.97% yesterday and if this trend continues, lenders will have more confidence and ability to reduce mortgage rates, which in turn will boost borrower affordability."
