House prices rise by 0.4% as property market picks up

House prices increased by 0.4% month on month in January, but it is too early to say whether the property market has turned a corner, according to an index.

Across the UK, the average house price was £240,054, marking a 4.1% annual increase, Halifax said.

It was the strongest annual increase since a 4.3% uplift in February 2018.

Russell Galley, managing director, Halifax, said: “House prices kicked off the year with a modest monthly increase, rising by 0.4% in January following the stronger gains of 1.8% and 1.2% seen in December and November respectively.

“As a result, annual growth remained relatively stable at 4.1%, up just a fraction from the end of 2019.”

Mr Galley said there are several signs of a pick-up in the housing market, including more buyer and seller activity which is consistent with a reduction in uncertainty in the UK economy.

He added: “However, it’s too early to say if a corner has been turned.

“The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty.

“So while housing market activity has undoubtedly increased over recent months, the extent to which this persists will be driven by housing policy, the wider political environment and trends in the economy.

“Looking ahead, we still expect a moderate rate of house price growth over the course of the year.”

The figures were released amid Government plans for a new scheme in England to cut the cost of some new homes by around a third for first-time buyers.

The First Homes scheme would make a proportion of new homes available at a 30% market discount rate.

Halifax’s survey adds to recent signs that activity has been picking up. Earlier this week, property websites reported record numbers of visits in January.

Operators of the property portal said that traffic in January exceeded 30 million visits.

This marked a new monthly record, an increase of more than 28% compared with January 2019 and 11% more than the previous record of 27.2 million in September 2019.

And Rightmove said that visits to its website passed 150 million for the first time in January, making it the busiest month it has ever recorded.

Howard Archer, chief economic adviser at EY Item Club said: “While it should be borne in mind that Halifax has tended to be at the top end of house prices measures, most of them have recently shown a firming in prices.”

He continued: “While we suspect that the housing market may get a further near-term boost from reduced uncertainties, we remain relatively cautious over the sector’s overall prospects for 2020 and suspect that the upside may well be limited.

“Nevertheless, we have recently raised our forecast for house price gains over 2020 to 2.8% from 2.0% and there is clearly a possibility that they could rise more than this.”

Anna Clare Harper, co-founder of property fund Anglo Residential, said: “It’s likely that the uptick in pricing is based on a release both of pent-up demand and supply.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “We will probably only see if a more sustained uplift is under way if stock levels as well as the pace of sales increase.”