It may not have seemed that house prices have had much to worry about in the last few years, but in recent months the pace of growth has definitely slowed down. Well, latest figures from Halifax show that the pace quickened again in January, but should buyers be worried?
According to the latest house price index from the bank, the typical price of a UK home stood at £193,130 in January, up from £189,304 in December, marking a monthly increase of 2%. It's the biggest monthly increase recorded since May last year, and quarterly and annual growth rates are ramping up, too.
Following five months of the rate of increase declining, prices rose by 1.9% on a quarterly basis and saw an annual increase of 8.5%, up from the rate of 7.8% recorded in December and the highest seen since October. Both mark the first recorded increase in the pace of growth since July, when the rates hit peaks of 3.5% and 10.2% respectively – and happily, all measures are still well below those summertime peaks.
"This bounce-back in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December," commented Martin Ellis, housing economist at Halifax. "These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market."
However, this doesn't mean that house price growth could return to such a rapid pace as that seen during the first half of last year. In fact, it's widely anticipated that price growth is expected to further moderate, which should come as welcome news to those getting on the housing ladder.
Overall growth rates remain significantly below those seen last summer, and there are other indications that a slowdown could continue. Supply of new homes on the market remains limited, with the report noting that new instructions fell for the fifth consecutive month in December. Property sales also steadily declined towards the end of the year – despite recording an overall increase of 15% year-on-year and the highest annual sales total (1.23m) since 2007, the bulk of activity occurred in the first six months of the year.
This could all suggest that the general downwards trend in price growth could continue, with Halifax predicting that national house prices will increase in a range of 3-5% in 2015, compared with the more dramatic 8% last year. This could prove to be positive for buyers and sellers alike – current homeowners will still be able to see their level of equity increase, while prospective buyers shouldn't be too concerned about rising house prices putting their ideal home out of reach.
Mortgage rates are at record low levels, too, which means it's a great time for anyone thinking of getting on, or moving up, the ladder. Remortgage customers could benefit even more, particularly if they've built up a decent amount of equity thanks to rising house prices, so start comparing the best rates and see if you could take advantage of the recovery in the market.
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