House prices still high but rate cuts could help buyers

Sometime this year, Halifax’s House Price Index will put the average cost of a British home at more than 300,000. It might already be there.

- JAMES MOORE

The latest edition of the index produced an average of £299,138, a rise of 0.7 per cent over December, which had recorded a 0.2 per cent fall.

There is more on the way. Count on it. The lender expects “modest” growth of between 0 and 3 per cent over the course of this year. This comes after a 4.8 per cent leap in 2024, which smashed expectations.

Given the level of demand, and the fact that the cost of renting is positively ruinous, I wouldn’t be at all surprised to see it coming in towards the top end of that but without repeating last year’s surge. The latter was driven by rising incomes and better mortgage rates – helped along by a couple of interest rate cuts by the Bank of England.

This year the outlook is murkier. Wage settlements have eased – although they are still running ahead of inflation – and the economy is also not in a happy place. At the same time as its (very welcome) latest decision to cut rates by a quarter point to 4.5 per cent, the Bank also slashed its GDP growth forecast to a dismal 0.75 per cent.