House prices have stopped falling - good news for landlords

Landlords increasingly reliant on capital appreciation may be relieved to hear that one of the country’s best respected indices suggests house prices have stopped falling.

The Halifax says that in February the annual rate of house price growth remained 2.1 per cent for the third successive month.

The typical UK property now costs £285,476 compared to £282,360 last month; this is a monthly change of 1.1 per cent, sizeably greater than the 0.2 per cent recorded in January.

Kim Kinnaird, director of Halifax Mortgages, says: “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. 

“In cash terms, house prices are down around £8,500 (2.9 per cent) 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.” 

The rate of annual growth slowed in all nations and regions in February. 

Annual growth reduced most significantly in North East England at 1.1 per cent in February against a rise of 3.6 per cent in January, with homes now costing an average £163,953. 

Average house prices in London are now £526,842, a 0.9 per cent fall from January’s £530,416. The Halifax says London may be affected by its large proportion of flats – prices for which have broadly stagnated. Despite this slowdown, homes in London still cost over £240,000 more than the UK national average. 

Annual growth fell the least in Scotland. House prices in that nation are now an average £198,779 - an annual growth rate of 2.2 per cent. Similarly in Wales, annual growth in February was 1.2 per cent. 

However, one piece of bad news is that when analysed by property type, prices of flats are now into negative territory over the past 12 months - down 0.3 per cent. 

Prices for terraced properties have broadly stagnated (up just 0.3 per cent annually) and detached properties have increased by just 1.5 per cent on the year, the lowest rise since the end of 2019. 

Annual price inflation remains stronger for new houses - 6.6 per cent.

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