UK house prices rose for a fifth month in February, confirming a rebound from a slump last year as consumers become more confident that borrowing costs are likely to drop.

Lender Halifax said the average value of a home rose 0.4 per cent from January to US$371,710. It left values 1.7 per cent higher than a year earlier. 

The figures indicate the housing market recovery is taking root after a stagnant 2023. Prospective buyers are being encouraged by easing mortgage costs and a rosier economic outlook.

It comes a day after the UK fiscal watchdog upgraded its housing market outlook on the back of anticipated interest rate cuts. The Office for Budget Responsibility expects average house prices to fall modestly this year, and at a shallower pace than anticipated four months ago.

The increase in prices last month was nonetheless the weakest reading since September, underlining the headwinds continuing to face the housing market. 

“These figures continue to suggest a relatively stable start to 2024, and align with other promising signs of increased housing activity, such as mortgage approvals,” said Kim Kinnaird, director at Halifax Mortgages.

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“Even with growing wages and inflation falling back, raising a deposit and affording a sizeable mortgage remains challenging, especially for those looking to join the property ladder, so it remains a possibility that there could be a slowdown in the housing market this year.”

Nationwide Building Society, the other major lender collating house-price statistics, said last week that average values rose 1.2 per cent in the year to February, the first year-on-year improvement in 13 months. By that measure, prices have increased 0.7 per cent in the last month. BLOOMBERG