House prices in the UK are now at a record high, with the average price of a property being £299,138, according to Halifax.
This represents growth of 0.7%, more than making up for a 0.2% contraction seen in the market last December.
Although average house prices are at a record high, the annual growth of prices is at a low of 3%, falling from December's high of 3.4%. Growth rates this low have not been seen since last July when prices grew by only 2.4%.
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The new data also suggests that the hike in property prices may come as demand for homes grows in the short term as buyers try to avoid the increase to stamp duty coming this April.
Amanda Bryden, head of mortgages at Halifax, said: “There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.”
Nevertheless, Bryden still concedes that “affordability is still a challenge for many would-be buyers”.
The news comes as interest rates were lowered by the Bank of England on 6 February, falling from 4.75% to 4.5%. The new base rate means that the cost of borrowing will become cheaper.
Markets are also pricing in further changes in the base rate this year, with analysts at Capital Economics predicting that interest rates will fall to 3.5% by early 2026.
Holly Tomlinson, financial planner at Quilter, said the base rate cut “should continue to ease affordability and perhaps give more people the impetus to dust off any previously shelved house buying plans”.
She added: “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 [...] the cut to interest rates could provide some much-needed momentum for the market.”
Where in the UK are house prices highest?
House prices differ greatly in each of the UK’s nations. For example, house prices in England are much higher on average than prices in Wales.
Northern Ireland is the nation in the UK with the strongest price growth as houses cost an average of £205,473, growing at an annual rate of 5.9%. Though this figure is still strong, it is much lower than the 7.3% growth that property prices in the country saw last December.
Prices in Wales grew by 3.6% when compared to last year, and houses cost an average of £227,397.
Prices in Scotland also grew in the same time period, albeit at a slower rate of 2.4%. The average price of a home in this part of the UK sits at £210,690.
House prices also diverge within England. The average price of a home in London is £548,288 – almost double the nationwide average – and growing at a rate of 2.8% since last year.
Meanwhile, the English region outside of London with the strongest growth is the North East as prices have ballooned since last year by 5.2%. Here, the average home now costs £178,696.
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