This time last year there was speculation that the UK was set for a property market crash. The Bank of England was raising interest rates at every meeting of its monetary policy committee and interest from potential new buyers was fading fast.

In the event, such fears have proved unfounded. Judging by the latest data from the lender Halifax, the Bank’s 14 increases in official borrowing costs had only a modest and temporary impact on prices. Prices rose by 1.3% in January, the biggest monthly increase since June 2022. No question, this has been one of the shortest and shallowest corrections on record.

The Halifax house price index suggests the low point in the recent cycle came last summer, when prices were falling at an annual rate of about 5%. This was also the moment when the City was anticipating that interest rates would need to rise well above 6% to tame inflationary pressures.

As it transpired, there has been no further tightening of policy from the Bank since it pushed borrowing costs to 5.25% in August last year, and house prices have now risen for four successive months, according to the Halifax.

There are three main reasons why the market has turned so quickly. Firstly, lenders have anticipated lower official interest rates and have been offering competitive deals to attract business. The consultancy Capital Economics estimates that the average quoted home loan rate has come down from 5% in November 2023 to 4.5% in January 2024.

Secondly, despite the flatlining of growth for the best part of the past two years there has been no increase in unemployment. Mass job losses were the big factor in explaining the much bigger declines in house prices in the early 1990s and the late 2000s.

Finally, homes have become more affordable due to rising pay. Nominal annual earnings growth (unadjusted for prices) peaked at 9.3% last summer, a period when the fall in house prices was most pronounced. Houses are still expensive but not as expensive relative to earnings as they were.

There are also structural reasons why house prices have a tendency to rise. Britain is a relatively small country, with a rising population, strict green belt regulations and a tax system that is generous to owner-occupiers. In the latest three months, the Halifax data shows annual house price inflation running at 10% or so.

Even so, talk of a boom is probably premature, at least for now. Martin Beck, the chief economic adviser to the EY Item Club, says the fact the UK has avoided a property crash limits the scope for house price growth in the near term: “Even if the official Bank of England policy rate aligns with our expectation of a total of 125 basis points of cuts this year (1.25 percentage points), mortgage rates will remain significantly higher than for much of the last decade or so. As a result, we think this year will see house prices broadly flatline rather than stage a significant rebound.”