Additionally, prices in the three months to January were 8.5% higher than in the same three months a year earlier, increasing from 7.8% in December. This measure of annual house price growth was at its highest since October 2014 (8.8%), but remains significantly below the peak of 10.2% in July 2014.
House prices in the three months to January were also 1.9% higher than in the previous three months. The quarterly rate of change increased for the first time since July 2014, but remained below the rates recorded between June and September last year.
Sales in 2014 were 15% higher than in 2013, at 1.23 million; the highest annual total since 2007 (1.62 million). However despite the annual rise, sales peaked in the first quarter before steadily declining during the course of the year with sales in the final quarter 5% lower than in the first quarter and 1% lower than in the third quarter.
The volume of mortgage approvals – a leading indicator of completed house sales – increased by 2% between November and December, to 60,275. This rise in approvals followed five successive monthly falls, possibly suggesting that the recent downward trend may be coming to an end.
Agreed sales were broadly stable in December following four successive monthly falls, according to data from the Royal Institution of Chartered Surveyors’ monthly report. Whilst demand generally has weakened in recent months supply remains very tight with new instructions falling for the fifth consecutive month in December.
House prices nationally are predicted to increase in a range of 3-5% in 2015 compared with 8% in 2014.
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to January were 1.9% higher than in the preceding three months. This was the first increase in the quarterly rate of increase for six months. Annual price growth also picked up, to 8.5% from 7.8% in December, but remained significantly below last July’s peak of 10.2%.
“This bounce-back in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December. These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market. It is, however, too early to draw any firm conclusions. The monthly figures in January can be particularly volatile due to the lower volumes of activity at this time of year and there have been unusually large rises on occasion in the past, such as in 2007 (2.3%) and 2009 (2.4%).
"Housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills. Nonetheless, we expect the overall downward trend in house price growth seen since last summer to continue over the coming months. Nationally, house prices are predicted to increase in a range of 3 to 5% in 2015 compared with 8% last year."
Alex Gosling, CEO of online estate agents HouseSimple, commented:
"Modest though it is, this rally confirms that the housing market is pausing for thought, not petering out. After five straight months of falling numbers of mortgage approvals, lending is on the up again as more would-be buyers get off the fence.
"While the monthly rise in prices of 2% should be taken with a pinch of salt as the number of sales in January is relatively low, the uptick in both the quarterly and annual rates of price growth suggests that buyer confidence is undimmed.
"While it’s a far cry from the frenzied double-digit growth seen in the first quarter of last year, a period of gentler growth is welcome. The property market is much less volatile than a year ago and feels more sustainable.
"It is a positive to see more balance in the market, rather than runaway prices purely across London and the southeast."
Jeremy Duncombe, Director, Legal & General Mortgage Club, added:
"These figures show that house price growth is starting to pick up again. However it is important that consumers look at the long term trends rather than focussing too heavily on short-term statistics. Whilst prices are increasing they are doing so at a slower rate.
"We still expect gross lending to increase in 2015 to around £225bn as interest rates remain low and remortgage volumes to increase as borrowers seek to take advantage of rock bottom rates that won’t be around forever. The major long-term problem remains a lack of supply which urgently needs to be addressed. A healthy and sustainable housing market is hugely important to the overall economic health of the country and therefore that should push this issue towards the top of the political agenda as the general election approaches."
