House price growth slows sharply - ONS

According to the Office for National Statistics, average house prices increased by 6.3% in the year to January, down from December’s rate of 9.3% and below expectations for around 6.5%.

In seasonally-adjusted terms, prices fell by 0.6% month-on-month, the largest since October 2021, when the stamp duty holiday came to an end.

The average house price for the UK was £290,000, around £17,000 higher than January 2022.

Country by country, the biggest increases were seen in Northern Ireland, where house prices rose 10.2% to £175,000, and in England, ahead 6.9% at £310,000. They increased 1% in Scotland to £185,000, and by 5.8% in Wales to £217,000.

Meanwhile, separate research from the ONS, also published on Wednesday, showed that private rental prices paid by tenants in the UK jumped 4.7% in the 12 months to February, up from 4.4% in January and the largest percentage change since the data series began in January 2016.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The downturn in the house market gathered momentum at the turn of the year, as still-elevated mortgage rates continued to weigh on buyer demand.

"Timely measures point to a further decline in prices over the coming months.

"Mortgage rates likely will not fall further in the near term, given that risk-free rates have stablished and banks might seek to reduce their loan books to keep more liquid assets on their balance sheets, just in case a large proportion of depositors wish to withdraw their funds.

"House purchase demand likely will remain below the level required to sustain house prices at their current level. We continue to look for an 8% peak-to-trough fall."

The Bank of England will announce it latest decision on interest rates on Thursday, with most commentators expecting the cost of borrowing to rise by 25 basis points to 4.25%.