Annual house price growth drops to lowest level for three years

Annual house price growth in the UK has continued to slow, according to Halifax.

The lender’s latest house price index shows prices grew by just 1.9% year-on-year in January, with annual increases plummeting from 12.5% to 1.9% in just six months.

The annual growth figure of 1.9% is down on the 2.1% the previous month and is now at the lowest seen in the past three years. Annual growth has fallen for seven successive months (see graph below).

Kim Kinnaird, director at Halifax Mortgages, said: “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years.

“As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.”

 How house price growth has slowed

Quarterly house prices fell for the third successive month, with prices down 3.6% in the three months to January compared to 2.4% and 1.1% in the preceding two quarters.

However, the index shows that monthly price increases have stabilised, with no change in prices between December and January, compared to drops of 1.3% and 2.4% in December and November respectively.

The average house price now stands at £281,684 compared to £281,713 in December.

The Halifax figures follow data from Nationwide published last week showing annual price growth in January had slowed to 1.1% from 2.8% in December.