According to the latest house price index from Halifax, house prices were static in January meaning annual house price growth stands at 1.9%. However, over the quarter prices dropped by an average of 3.6%. It means that the typical home is worth £281,684.

The month of price stability comes after drops of 1.3% in December and 2.4% in November in previous Halifax surveys. 

Regional differences

On a regional basis, Wales saw its annual house price growth drop from 6% in December to 2%, while the south west also saw growth slow sharply, from 6% to 2.7%.

In London, annual house price inflation is completely flat at 0%, though Halifax noted that the price of a typical London home is still around £250,000 above the national average.

The Halifax index follows data from Zoopla which suggested that demand from buyers has fallen, as they wait for house prices to drop further.

Kim Kinnaird, director of Halifax Mortgages, said that the expectation was that the squeeze on household incomes from the cost-of-living crisis and higher interest rates would result in a slower housing market.

She continued: “For those looking to get on or up the housing ladder, confidence may improve beyond the near term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home-buying affordability over time.”

When will prices rebound?

Karen Noye, mortgage expert at Quilter, argued that while we are “still far from out of the woods”, the fact that the economy is in a more predictable shape is helping to drive demand up in the housing market.

She continued: “Although there have been damning predictions about the UK economy in comparison to its peers by the likes of the IMF, if there is only a very shallow recession, we should start to see house prices rebound as interest rates fall once the spectre of inflation has gone. It will still take some time but it’s likely house prices will be on an upward trajectory as and when people’s personal finances have recovered from the current shock.”

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, felt that the data showed house prices would soon start to fall which could lead to a buyers’ market.

She said: “Annual house price growth has slowed right down and is now just 1.9%. The consensus of data from around the market seems to suggest we will soon be seeing annual price falls.

“The data did point to a glimmer of hope for buyers though. A mixture of falling house prices with interest rates peaking at a lower level than first thought will improve affordability. Added to this, the Bank of England recently said it did not expect the incoming recession to be as long or as deep as initially feared which will ease concerns about potential redundancies and so we could see more people looking to get a step on the housing ladder in the coming months.”