The house market seems to be rallying in response to the pressures of wider economic uncertainty, according to experts responding to the Halifax House Price Index, which revealed a period of stability in January.

Halifax’s January Index revealed that the typical UK property now costs £281,684, compared with £281,713 in December.

“The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January,” said Kim Kinnaird, director, Halifax Mortgages.

This followed a series of significant monthly falls at the end of last year with -1.3% in December and -2.4% in November.

Iain Crawford, chief executive of Alliance Fund, noted that the increasing cost of borrowing “has resulted in buyers entering the fray with less gusto and the price achieved by sellers has reduced as a result”.

“But what we’re certainly not seeing is a mass exodus of buyer activity and an impending market collapse.”

James Forrester, managing director of Barrows and Forrester, added that ”the property market has fared far better than many were quick to forecast”.

“We’ve already seen the rot reverse with respect to the previous monthly reductions in property values,” he said. “This is despite the government’s best efforts to drive the wider economy into the ground whilst hiking the cost of borrowing for hard-pressed homebuyers, buyers who have already had to contend with record rates of house price growth and a lack of housing delivery.”

Forrester added: “Now that the dust has settled, don’t be surprised to see the property market stabilise following this period of adjustment and positive house price growth to return over the coming months.”

The pace of annual growth has continued to slow, to +1.9%, from +2.1% in December. Kinnaird explained that this is the lowest level recorded over the last three years.

“The average house price is now around £12,500 (-4.2%) below its peak in August last year, though it still remains some £5,000 higher than in January 2022 (£276,483),” she said.

The index found that the slowdown in annual house price inflation is reflected in most nations and regions across the UK.

Wales saw its rate of growth fall to 2.0% in January, from 6.0 in December. The average house price in Wales is £210,275, down from a peak of £224,210 in August.

The South West has also seen annual house price growth slow, with the average house price of £298,853, dipping below £300,000 for the first time since March 2022.

In Northern Ireland and Scotland, the index identified that the pace of annual growth eased more slowly. This was with a growth rate of 6.9% in Northern Ireland in January compared to 7.1% for the month prior. In Scotland the growth rate for January was 2.4% compared to 3.3% in December.

London saw the cost of buying an average home fall from £541,472 to £530,396 in January, with annual house price inflation flat (0.0%) compared to 2.9% in December.

Kinnaird said: “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years. As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.”

James Forrester, managing director of Barrows and Forrester, added: “All things considered, the property market has fared far better than many were quick to forecast and we’ve already seen the rot reverse with respect to the previous monthly reductions in property values.”

“This is despite the government’s best efforts to drive the wider economy into the ground whilst hiking the cost of borrowing for hard pressed homebuyers, buyers who have already had to contend with record rates of house price growth and a lack of housing delivery.”

Forrester added: “Now that the dust has settled, don’t be surprised to see the property market stabilise following this period of adjustment and positive house price growth to return over the coming months.”