The chief executive of Propertymark is warning that interest rates are likely to rise at least one more time.

The remarks by Nathan Emerson come in response to the latest house price index – this one by Halifax – showing that annual house price inflation is right down to just 1.9 per cent. 

Emerson says: “In January, estate agents have seen a lot of new houses coming to the market with motivated sellers, but the key is getting the pricing right.

“Those priced accordingly have sold quickly but those who are testing the market at higher prices, trying to align with last year are finding they have to reduce or be open to offers.  

“The rise in interest rates will undoubtedly be affecting buyers overall budgets and sellers need to be realistic. This doesn’t look set to change any time soon as it’s likely the Bank of England will raise rates again in order to bring inflation under control.”

The typical UK property now costs £281,684 compared to £281,713 last month.

The annual rate of house price growth slowed to 1.9 per cent from 2.1 per cent in December with the rate of annual growth slowing in all nations and regions during January.

Kim Kinnaird, director of Halifax Mortgages, says: “The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January at £281,684, a very small decrease on December. This followed a series of significant monthly falls at the end of last year.

“The pace of annual growth has continued to slow, to 1.9 per cent which is the lowest level recorded over the last three years. The average house price is now around £12,500 (down 4.2 per cent) below its peak in August last year, though it still remains some £5,000 higher than in January 2022 (£276,483).

“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.

“For those looking to get on or up the housing ladder, confidence may improve beyond the near-term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”