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House prices ‘stabilise’ in February but are down £8k from peak

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
07/03/2023

The average house price increased once again in February, the latest index from Halifax reveals. However, they are down around £8,500 from the summer 2022 peak.

Over the month, typical prices increased 1.1% to an average of £285,476. It comes after a 0.2% increase in January, following falls at the end of last year in the aftermath of the mini Budget.

As a result, the annual rate of house price growth now stands at 2.1% for the third consecutive month.

Looking at the individual regions, Halifax found that the rate of annual growth slowed across the board. It was most pronounced in the North East, where it dropped from 3.6% in January to 1.1%, while in London, prices are now down by 0.9% on a year ago.

Scotland saw the smallest change over the month, with the rate of annual growth moving from 2.3% to 2.2%.

Kim Kinnaird, director of Halifax Mortgages, suggested that falls in mortgage rates, improving consumer confidence and the resilience of the labour market were “helping to stabilise prices”.

She said: “In cash terms, house prices are down around £8,500 on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic.

“With average house prices remaining high, housing affordability will continue to feel challenging for many buyers.”  

The Halifax figures come just days after Nationwide reported a 0.5% drop in February, and suggested annual house price growth had turned negative for the first time since 2020.

A muted spring bounce

The figures are a “tentative step in the right direction”, according to Jonathan Hopper, CEO of Garrington Property Finders, who argued that prices are now “settling rather than sliding”. He added that it’s too early to call the end of the price correction. 

“The fact remains that while many buyers have both the financial ability and the opportunity to buy, they lack the confidence to do so – and as a consequence the market is still slowing,” he said, noting that buyer enquiries and seller instructions are down, as are mortgage approvals.

“All this points to the traditional spring bounce being very muted this year, with low numbers of transactions and meandering prices,” Hopper added.

A brief respite

Charlotte Nixon, mortgage expert at Quilter, said that the current unpredictability of the market will be a concern for those hoping to sell their properties. 

She added that the figures are perhaps more positive than expected, but warned that increased mortgage rates and the high cost of energy could see a return to falling prices in the months ahead.

Nixon said: “Many homeowners are struggling to keep up with the increasing energy bills, which is causing them to cut back on their spending elsewhere. This, in turn, has decreased demand from buyers as people are hesitant to make such a significant investment in a time of financial uncertainty.”

However, Mark Harris, chief executive of SPF Private Clients, was more positive, pointing to competition among mortgage lenders who are jockeying for position at the top of the best buy tables.

He said: “Even if there is another base rate rise this month, there is a growing expectation that rates are close to their peak, and if inflation also continues to fall, the outlook appears brighter for borrowers.”