House prices rose in January at the fastest annual rate in two years, according to Halifax, although the mortgage lender said it was too early to tell if the property market had turned the corner after weakness seen in 2019.
Annual growth in prices reached 4.1 per cent last month, the strongest year-on-year increase since February 2018.
But the pace of rises slowed month-on-month, according to Halifax's index. Prices increased on the month by 0.4 per cent in January compared with stronger gains of 1.8 per cent in December and 1.2 per cent in November.
Russell Galley, a managing director at Halifax said there were several signs of a pick-up in the housing market, including more buyer and seller activity, which is consistent with a reduction in uncertainty in the UK economy.
“However, it’s too early to say if a corner has been turned,” he added. “The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year but was delayed by economic uncertainty.”
The index is the latest to point to a possible upturn in the housing market following the general election. The number of sales rose by 6.2 per cent in December, according to HMRC, while surveyors’ organisation RICS saw an increase in both the number of property sales and new enquiries from potential buyers last month.
The annual growth of 4.1 per cent is in line with a survey by Nationwide Building Society that found house price inflation was 1.9 per cent in January, a 16-month high.
Halifax said it expected a “moderate” rate of house price growth over the course of the year as demand was likely to continue to exceed the supply of properties for sale across the UK because of the “subdued” pace of new building.
The number of new build home starts fell 7 per cent to 157,550 in the year to September, government figures showed last month, although the number of completions rose by 9 per cent compared to a decade high of 177,980.
On Friday, the government launched a consultation on the design of its First Homes scheme that will offer houses for first-time buyers at a 30 per cent discount.
Housing Secretary Robert Jenrick said it would mean a discount of £94,000 on the average price of a newly built home in England of £314,000. The discount will be available on a “proportion” of new homes, although he did not disclose how many.
Local councils will be able to give priority to key workers in their area such as police, nurses, prison officers and teachers, while military personnel will be prioritised as part of Armed Forces Covenant.
Michael Stone, chief executive of estate agents Stone Real Estate, said enabling first-time buyers to buy new with a discount in their local area would help to breathe life into the market.
David Renard, housing spokesman at the Local Government Association, said councils supported measures to enable home ownership but warned it was “important that this does not come at the expense of providing truly affordable homes for rent”.
Polly Neate, chief executive of Shelter, said the policy “simply shuffles the deck chairs on the Titanic”.
She added: “The country desperately needs more low cost homes which are genuinely affordable to those people who are struggling at the sharp end of the housing crisis.
“However instead of offering a route to building additional low cost homes this policy simply puts at risk the social homes currently being built.”