House prices rise for the fifth consecutive month, according to Halifax

House prices could will affect those looking at buying or selling a house
House prices have risen for the fifth consecutive month in February, according to Halifax (Image credit: Getty Images)

House prices rose by 0.4% in February marking the fifth consecutive monthly increase, according to Halifax.

The rise marks a 1.7% annual increase compared to this time last year with the average home now costing £291,699.

Experts are predicting the positive shift in house prices could continue in 2024, although external factors such as the bank rate and inflation playing a key role in these equations.

'How much is my house worth' may be crossing your mind at the moment — here's what you need to know about house prices in the UK.

House prices see 1.7% annual rise in February

House prices saw a 0.4% rise in February and a 1.7% annual rise, according to Halifax.

Nationwide also revealed a 1.2% annual rise in February with increased activity also being reported at the start of 2024. 

Kim Kinnaird, Director, Halifax Mortgages, said: “UK house prices rose for the fifth consecutive month in February, up by +0.4% or £1,091 in cash terms, with the average house price now £291,699.

“On an annual basis, house prices were +1.7% higher than a year ago, slowing from +2.3% in January. However, these figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.

“In fact, the average price tag of a home is now only around £1,800 off the peak seen in June 2022."

Robert Gardner, Nationwide's Chief Economist, stated: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries."

Kim Kinnaird headshot
Kim Kinnaird

Kim Kinnaird holds the position of Banking and Trade Delivery Director within the Commercial Bank at Lloyd Banking Group. In her role she oversees the service teams responsible for managing the daily banking requirements of Commercial Banking clients, with a primary focus on cash management, payments, and comprehensive servicing of trade products for the Group's business clients.

Robert Gardner headshot
Robert Gardner

Robert Gardner serves as the Chief Economist at Nationwide, where he heads a team dedicated to offering economic analysis and guidance, with a specific focus on the UK economy and a strong emphasis on monitoring the housing market and house prices.

House prices boosted by 16% increase in sales at start of 2024

In February, there was a 0.9% increase in average new seller asking prices, amounting to £3,091, bringing the figure to £362,839. 

Notably, there's been a 0.1% increase compared to the same period last year, marking a reversal from the consistent annual declines seen since August 2023. 

This uptick is indicative of a burgeoning market momentum. Additionally, the number of sales agreed upon in the first six weeks of this year has surged by 16% compared to the corresponding period in the previous year.

This suggests that prospective buyers are capitalising on perceived favourable market conditions in 2024, demonstrating an early eagerness to make moves in the housing market.

Tim Bannister Rightmove's, Director of Property Science said: “We said that February would be an important indicator for the year ahead, and the question was whether the Rightmove Boxing Day bounce in buyer activity would keep its spring into March or lose momentum. 

"It's proved to be the former, with the number of sales agreed continuing to considerably outstrip last year. Early-bird Boxing Day buyers got a head start in cherry picking from a record level of new property choice and have now been joined by many other buyers also believing that 2024 offers the right market conditions to move."

Tim Bannister headshot
Tim Bannister

Tim Bannister joined Rightmove in 2010, initially working in our lettings division before transitioning his focus to insights. As the current Director of Property Science, Tim leverages data, technology, and analytics to create distinctive insights that inform and guide property-related decision-making processes.

Bank rate crucial to future house prices

The future of house prices will be determined by future Bank of England rate changes, according to industry experts.

The bank base rate was increased in 2023, and still stands at 5.25%, which has reduced affordability options for potential homebuyers as it has meant mortgage options were not only set at high levels but were reduced.

Kim Kinnaird said: “While it is encouraging that we’ve seen growth in recent months, what happens next remains uncertain. Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading."

Despite the rise in house prices, Robert Gardner agreed with this assessment as he said "near-term prospects remain highly uncertain".

He added: “Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.

“While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”

Will house prices rise or fall in 2024?

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Despite a positive start to 2024, the future of the housing market remains uncertain with inflation fluctuations making affordability difficult for potential homeowners.

Robert Gardner explained: “How mortgage rates evolve will be crucial, as affordability pressures were the key factor holding back housing market activity in 2023. Indeed, at the end of 2023, a borrower earning the average UK income and buying a typical first-time buyer property with a 20% deposit had a monthly mortgage payment equivalent to 38% of take-home pay – well above the long run average of 30%.

"If average mortgage rates were to trend down to 4%, this would ease the mortgage payments burden to 34% of take-home pay (assuming house prices and earnings are unchanged). However, other things equal, mortgage rates of 3% (still well above the lows seen in the wake of the pandemic) would be needed to bring this measure of affordability back towards its long run average."

Young couple moving house

House prices could affect those looking to buy and sell in 2024 (Image credit: Getty Images)

What does this mean for mortgages?

The current state of the mortgage market has created an atmosphere of uncertainty among potential homebuyers.

Mortgage rate rises have continued despite the Bank of England's (BoE) decision to keep the base rate at 5.25% in December. This meant the average five-year fixed mortgage rate is now 5.67%, down from its peak of 6.11% in July 2023.

Kim Kinnaird stated: “Even with growing wages and inflation falling back, raising a deposit and affording a sizeable mortgage remains challenging, especially for those looking to join the property ladder, so it remains a possibility that there could be a slowdown in the housing market this year.”

What does this mean for those wanting to sell?

Buyers are active, particularly when the right property at the right price becomes available, but agents advise sellers to capture buyer attention by setting a competitive price from the outset, according to Rightmove analysis.

According to Rightmove's analysis, commencing with a higher price and later reducing it significantly diminishes the chances of a successful sale. However, many sellers are struggling to adapt their pricing strategies in this more challenging market. 

Tim Bannister said: "Despite these positive activity numbers, the market appears to be operating at two speeds. Some agents report that properties that are accurately and competitively priced are being snapped up by budget-conscious buyers who are keen to make 2024 their year to move, having paused during the uncertainty of 2023. 

"However, properties that are over-priced will immediately stand out against more competitively priced neighbours and are being left on the shelf by price-sensitive buyers. Evidence of this is that despite higher activity levels than last year, it’s now taking an average seller more than two weeks (16 days) longer to successfully find a buyer than at the same time last year.

"The time to find a buyer is at its slowest since 2015, excluding the initial lockdown months of April and May 2020. Buyers now have more time to consider which property is right for them, making it even more important for sellers to price temptingly and stand out from the crowd."

I’m buying/selling a house, what do I need to know?

The recent slowdown in consumer price inflation was not as significant as anticipated, leading to increased expectations for future Bank Rate decreases, according to Nationwide.

Robert Gardner advised: "Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what's happening in their local housing market."

Despite recent fixed mortgage rate increases many potential buyers could find affordable housing options, especially with larger upfront deposits.

However, first-time buyers could find a welcome government announcement soon with the government proposing a 1% deposit limit for those buying their first house in an effort to get people onto the property ladder.

As well as this first-time buyers do not have to pay stamp duty for homes worth up to £425,000 whilst the stamp duty cut in September 2022 meant the threshold for stamp duty exemption in England and Northern Ireland was lifted for homes worth up to £250,000 for all other buyers.

Those planning on buying a house can take a look at our house viewing checklist as well as look at our guide on building surveys.

Joseph Mullane
News Editor

News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals.  Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.