7 February 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 Index shows that UK house prices rose by 0.7% in January, bringing the average price to a record £299,138 and now just shy of breaking £300,000. On an annual basis, prices are now 3.0% higher with the market continuing to surprise homeowners in the face of unpredictable economic headwinds.
"One potential positive came yesterday when the Bank of England cut interest rates to 4.5%. Although the cut came as little surprise, it should continue to ease affordability and perhaps give more people the impetus to dust off any previously shelved house buying plans. Lenders had already been trimming rates in anticipation of this move, and with expectations of further cuts later in the year more buyers are likely to join back into the market.
"For first-time buyers, this offers a glimmer of hope, as affordability has been stretched to breaking point in recent years. Lower mortgage rates should make repayments more manageable, but securing a property will remain a challenge, particularly with the changes to stamp duty looming in April. The threshold for first-time buyers will drop from £425,000 to £300,000, meaning those purchasing a home above this level could suddenly find themselves facing an extra tax bill. This will hit buyers in higher-cost areas particularly hard too, making an already difficult climb onto the property ladder even steeper.
"More broadly, the cut to interest rates could provide some much-needed momentum for the market. If buyers sense that borrowing costs have peaked and are starting to fall, demand could increase, supporting house prices in the months ahead. However, affordability remains tight, and with housebuilding still lagging behind demand, competition for available properties could keep prices elevated. Although the headline news of a cut in interest rates certainly should help borrowers, there are still some potentially choppy waters ahead.
"For those looking to buy in 2025, it will be a balancing act. Mortgage rates should continue to drift down, but house prices may hold firm or even rise if demand picks up. Seeking professional financial and mortgage advice will be key in navigating these changes and securing the best possible deal."
