House prices increase by 9.7% in the year to January

UK house prices have increased by 9.7% in the year to January, up from 9.5% a month earlier, according to the Halifax House Price Index. The average cost of a house is now £212,430 [1].

The mortgage lender has said that the last time this figure was greater was in July 2014, when prices were rising by more than 10% [1].

Martin Ellis, Halifax’s Housing Economist has said in a statement: “The imbalance between supply and demand continues to exert significant upward pressure on house prices,” and that “this situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease” [1].

The expectations were for a modest 0.1% rise, which shows the latest evidence of the rush of investors purchasing buy-to-lets before the tax reforms in April [2].

Low interest rates and record levels of employment are driving demand for housing. The Bank of England said mortgage approvals rose in December, indicating continued resilience in the market [3].

However, demand could fall away as and when interest rates start to rise, and mortgage lenders begin to stress-test applicants more rigorously. This is not yet showing in the Halifax figures [4].

“The sobriety in the market is not being evidenced in the Halifax Index” Lucian Cook, Head of Residential Research at Savills has said. The Index takes average house movement across the UK; therefore, the high-end market in London and the countryside have been muted when compared to cheaper areas such as the south-east, where it remains strong [4].

Ed Mead, Head of Douglas & Gordon has said: “Supply is likely to stay scarce, agents chasing listings had forced asking prices too high and a combination of this and scaremongering on interest rates by the Bank of England did dampen thighs a bit. But as agents start to reduce asking prices the market will move and prices will most likely accelerate again” [4].


[1] BBC News. ‘House price growth rises to 9.7%, says Halifax’.

[2] Financial Times. ‘UK house price gains still flying’.

[3] Bloomberg. ‘UK house prices increase 1.7% as demand pressure persists’.

[4] Telegraph. ‘House prices rise at fastest rate since July 2014 – but supply is choking’.