Halifax: House prices rise again – enjoy it while it lasts

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the December Halifax House Price Index, showing prices rise again, and suggesting enjoying it while it lasts.

Key points from publication:

• • House prices rose 1.1% in December – the third consecutive monthly increase.
  • They are up 1.7% during 2023.
  • The average house now costs £287,105, up £4,800 in a year.
  • Halifax says house prices will fall between 2% and 4% this year.
  • Northern Ireland has shown the strongest annual growth – up 4.1% in a year, while the South-East of England is struggling most, down 4.5% in a year.

Sarah Coles says:

“December brought more good news for sellers, with prices up during the month, and the average property gaining £4,800 in a year.

“There’s good news on the way for the next few months too, as lower mortgage rates boost buyer enthusiasm.

“However, there’s every chance that a tough 2024 could test buyers to breaking point, and prices may well fall over the year.

“Prices defied all expectations, posting a positive return in 2023, after a shortage of properties on the market encouraged prices higher.

“Things had looked dire after six months of consecutive falls, so three months of price rises will have raised the spirits of sellers.

“This doesn’t mean a sales bonanza, because buyers are still thin on the ground, and property is shifting very slowly.

“Sales actually slowed for the third consecutive month in November, delivering the slowest November in a decade.

“It means that a rise on paper may not actually do sellers much good in reality if there’s nobody to buy their property.

“The good news is that falling mortgage rates could well inject a little more enthusiasm into the market, Bank of England figures show that more than 50,000 mortgages were approved in November, and while that’s still well below a typical month of 60,000, it has come off the bottom.

“Mortgage rate cuts in the months since – which have seen 2-year rates fall below 6% – may well help inspire more buyers.

“But like a dodgy prawn at a buffet, there’s bad news lurking that could spoil the whole thing.

“Halifax has joined the forecasters expecting house prices to fall in 2024.

“In an environment of higher interest rates, the global economy is slowing, and there’s every chance that economic threats from unemployment to a slowing of wage rises and sticky inflation could put pressure on house prices as we go further into 2024.

“It means anyone with a property on the market has a golden opportunity to sell in the next few months and should consider that carefully when setting a price.

“If all this persuades you to keep your property plans on hold for another year, it’s worth thinking carefully where your deposit is sitting in the interim.

“If it’s gathering dust in an easy access savings account with a high street giant, there’s every chance it could be doing far better elsewhere.

“If you shop around among newer banks, building societies and savings platforms, you can get a far better rate.

“If you know you won’t buy for another year you can fix for 12 months, because although savings rates have dropped, you can still get more than 5% on savings fixed for a year, so when you’re ready to buy, your money will have been working harder for you in the interim.”

Kindly shared by Hargreaves Lansdown