UK house prices rise for third consecutive month, Halifax data shows

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UK home costs rose for the third consecutive month in December to their highest degree since March 2023, in line with information from mortgage supplier Halifax that gives additional proof of a rebound within the property market.

Common home costs elevated 1.1 per cent final month and by 1.7 per cent final yr, Halifax stated on Friday. It was the third successive month-to-month rise and took costs to their highest level in 9 months.

Separate information on Friday confirmed UK development exercise registered its greatest studying in 4 months in December, with housebuilders reporting the mildest decline since July.

The S&P World development buying managers’ index, a month-to-month indicator of the well being of the sector, rose to 46.8 final month from 45.5 in November. A studying beneath 50 signifies a majority of companies reporting a contraction.

Whereas Halifax attributed the December enhance to a scarcity of properties on sale, the home worth and PMI figures add to proof that the property market is bettering as mortgage charges fall and builders’ sentiment rises.

This can elevate hopes of enchancment in development output and home-related spending, which have an effect on the broader financial system, because the squeeze from excessive rates of interest and dwelling prices eases.

Imogen Pattison, economist on the consultancy Capital Economics, stated the “huge” enhance within the Halifax index “confirms that falls in mortgage charges are translating into renewed will increase in home costs”.

Bank of England data printed on Thursday confirmed mortgage approvals rose to a five-month excessive of fifty,100 in November. The central financial institution discovered that two-year fastened mortgage charges with 60 per cent loan-to-value eased on common from 6.2 per cent in July to five.1 per cent in November.

Charges on standard five-year offers have additionally declined for the reason that summer time, with huge high-street lenders corresponding to NatWest and HSBC saying cuts to merchandise this week.

The property market is very delicate to adjustments in rates of interest, that are at a 15-year excessive of 5.25 per cent. Monetary markets count on the BoE to start out slicing charges within the spring, taking the price of borrowing to three.75 per cent by the top of the yr.

Charles Breen, founding father of mortgage dealer Montgomery Monetary, stated there was a “renaissance” within the property market in December. “Lenders had been proactive in slicing charges, and other people have now adjusted to the brand new regular and accepted charges as they’re,” he added.

Kim Kinnaird, mortgage director at Halifax Mortgages, stated that though the expansion in December was “possible being pushed by a scarcity of properties”, persevering with falls in mortgage charges meant “we may even see a rise in confidence from patrons over the approaching months”.

A typical UK house value £287,105 final month, simply over £5,000 greater than in December 2022 and the best in 9 months, in line with Halifax.

Regardless of December’s rise, annual worth development was uneven throughout areas and nations. Property costs rose 4.1 per cent in Northern Eire and by 2.6 per cent in Scotland, however fell 4.5 per cent within the south-east of England.

London remained the costliest a part of the UK, with the common house costing £528,798, though costs within the capital declined 2.3 per cent on an annual foundation.

Analysts disagree on the outlook for home costs. With rates of interest prone to stay elevated, Halifax predicted house prices would fall 2-4 per cent in 2024.

Against this, Capital Economics stated it anticipated an increase in home costs this yr on the again of improved affordability and the decline in common mortgage charges.

“In gentle of the changes to our mortgage charge forecasts we’re revising up our forecast for home worth development this yr from minus 1.5 per cent yr on yr in This autumn to plus 3 per cent,” stated Pattison.