UK house prices rose at the quickest monthly pace since June as mortgage rates fell and consumer confidence improved but are down by £8,500 overall from their August peak.
Prices increased 1.1% on the month in February following a 0.2% rise the month before, to £285,476, Halifax said.
Annual price growth remained frozen at 2.1% for the third consecutive month, the building society added.
Mortgage rates jumped last autumn following September’s mini-budget, and the mortgage market later showed signs of settling.
Bank of England base rate rises have also been putting upward pressure on borrowing costs.
Halifax struck a cautious tone about the outlook.
Kim Kinnaird, director, Halifax Mortgages, said: “Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December. Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend.
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“In cash terms, house prices are down around £8,500 (-2.9%) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic. With average house prices remaining high housing affordability will continue to feel challenging for many buyers.”
@HalifaxBank HPI shows Annual house price growth to be stagnating at +2.1% for the 3rd mth making the AVG house price now £285,476 in Feb 23. The degree of growth decline across all nations & regions varies but house growth remains either stable or positive whilst flats slump pic.twitter.com/C3vLnsjwmR
— Emma Fildes (@emmafildes) March 7, 2023
Average house prices in London have fallen by 0.9% over the past year – possibly affected by the capital’s large proportion of flats, Halifax said.
Nathan Emerson, chief executive of estate agents’ body Propertymark, said: “Year on year, estate agents across the UK have seen a small drop in the number of sales being agreed whilst the number of new properties coming to market has remained the same.
“Increases to interest rates have caused buyers to rethink their budget and haggle on price, but the drive evidently still remains to see their purchase through and move home.”
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Annual growth fell the least in Scotland. House prices in the nation are now an average £198,779.
Similarly in Wales, annual growth in February was 1.2%, with homes costing £210,917, on average. Those purchasing a home in Northern Ireland will now pay £185,009, on average, an annual growth rate of 5.7%.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders continue to jockey for position, with a number increasing the pricing of their cheapest five-year fixes.
“However, even if there is another base rate rise this month, there is a growing expectation that rates are close to their peak, and if inflation also continues to fall, the outlook appears brighter for borrowers.”
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