7 March 2025
If you are covering the latest Halifax house price index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
"The latest Halifax house price data shows that UK property prices fell slightly by 0.1% in February bringing the average house price to £298,602. This follows a period of tentative recovery in the housing market, as lower mortgage rates have provided some relief to buyers. However, affordability remains stretched, and economic uncertainty, both domestic and global, continues to weigh on sentiment.
"Recent inflation data showed an unexpected uptick, which could complicate the Bank of England’s plans to cut interest rates in the coming months. This could mean mortgage rates stay higher for longer than many had hoped, acting as a drag on house prices. While lenders have been gradually reducing fixed-rate mortgage costs in recent months, any inflationary pressures may slow or even reverse that trend. The lack of stock through continues to prop up prices.
"Beyond domestic factors, global economic developments could have far-reaching consequences for UK interest rates and in turn housing affordability. Donald Trump’s renewed rhetoric on tariffs is already unsettling financial markets. If enacted, these tariffs could drive up inflation worldwide. A resurgence of inflation would force central banks, including the Bank of England, to delay or even reconsider rate cuts.
"The housing market has been banking on rate cuts this year, but if inflation stays sticky borrowing costs could stay higher for longer, slowing house price growth or even pushing prices down in real terms.
"The next few months will be crucial in setting the direction of the housing market. If inflation can be controlled and the Bank of England presses ahead with rate cuts, the housing market could see renewed momentum. However, persistent inflation, higher mortgage rates, and global trade tensions could dampen demand and keep price growth subdued.
"For now, buyers and sellers should remain realistic. Mortgage rates remain well above their historic lows, and while affordability is slowly improving, any recovery in house prices will be slow and uneven. Those considering moving should keep an eye on both interest rate expectations and global events, as they will play a bigger role than ever in shaping the cost of borrowing in the UK."
