The housing market experienced a strong start to the year, with house prices rising by 0.7% to just shy of £300,000 in January.
This brought annual growth to 3.0%, dipping from 3.4% the month before.
The market is currently in a busy state as buyers look to purchase properties before stamp duty thresholds revert back to lower levels in April.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “January was busier than normal, with a lot of market appraisals, which bodes well for a busy spring market.
“Increased activity from first-time buyers has helped, with more sales agreed in chains where someone is keen to take advantage of the stamp duty concession before it ends in March.
“The benefit to the first-time buyer is instant as it is real cash in their pocket, allowing someone to buy who might not have been able to, and the government perhaps needs to consider further stimulus for the market in its Spring statement.
“While all this suggests growing confidence, it’s too soon to say for certain how the market will unfold.”
The Bank of England cut the base rate to 4.5% last week, while it’s expected the base rate will drop to 3.75% by the end of the year.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Modest house price growth is being underpinned by borrowing costs which, while softening, remain higher than many borrowers were paying just a few years ago.
“With the Bank of England cutting interest rates this month, and the expectation of further reductions to come, this should encourage borrowers to make their move.
“Swap rates continue on a downwards path with some lenders dropping their mortgage rates, in part reversing recent increases. The latest rate cut was largely expected by the markets and has been factored into pricing already but a continual decline in Swaps would enable lenders to price more keenly, easing borrowers’ affordability concerns.”
Northern England is massively outshining the south, as prices in the North East grew 5.2% in the past year, nearly twice as fast as prices rose in London.
Jonathan Hopper, CEO of Garrington Property Finders, said: “Even more striking is the price divide. If the mainstream market is going like a train, the prime market is going like a glacier.
“Price growth has slowed to a crawl, or is flat, in some of Britain’s most expensive and desirable locations. Two factors lie behind this – an abundance of homes for sale, and the intensely price-sensitive approach being taken by buyers.
“While at the bottom end of the market, some first-time buyers have been viewing in haste and offering high in order to do a deal quickly in an effort to beat next month’s Stamp Duty deadline, at the top end of the market it’s the opposite.
“With the supply of prime homes for sale outstripping demand, wealthy buyers find themselves spoilt for choice and able to negotiate hard on price.”
