The average house price fell by £2,900 to £288,430 but despite the downturn prices remained higher compared to the previous year, showing a 0.3% increase in March.
House prices fell for the first time in six months after Halifax reported a 1% drop in prices last week as high mortgage rates continued to hamper affordability for would-be buyers.
The average house price fell by £2,900 to £288,430 but despite the downturn prices remained higher compared to the previous year, showing a 0.3% increase in March although the growth rate was lower than the 1.6% annual increase seen in February.
NOT UNEXPECTED
Kim Kinnaird, Halifax MortgagesBut Kim Kinnaird, Director, Halifax Mortgages, says: “That a monthly fall should occur following five consecutive months of growth is not entirely unexpected particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022.
“Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.”
She adds: “Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
“The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high interest rates. Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.”
Tom Bill, Knight FrankTom Bill, head of UK residential research at Knight Frank, says: “Since November, ten weeks of recovery in the UK housing market have been followed by ten weeks of drift.
“Mixed signals around inflation, rising supply and a wave of people rolling off sub-2% fixed-rate mortgages agreed in early 2022 mean the direction of travel for the property market is currently sideways.
“Once a rate cut appears firmly on the horizon and more mortgage rates start with a 3, we expect stronger demand to push UK prices 3% higher this year.”
Anthony Codling, Managing Director of equity research at RBC Capital Markets and non-executive director of Twindig, was also optimistic.
“Mortgage approvals are increasing, wages are rising and in our view mortgage rates are more likely to fall than rise in the coming months, therefore looking forward we believe the housing markets glass to be half full rather than half empty,” he says.
Iain Mckenzie, The Guild of Property ProfessionalsIain McKenzie, Chief Executive of The Guild of Property Professionals, was equally sanguine.
“News that house prices may be slowing contradicts the current heightened sense of activity in the market, but other lenders such as Nationwide are also seeing the same trend,” he says.
“The property market is still in recovery, and we are likely to see ebbs and flows through the year as buyers navigate challenging living costs.
“The healthy level of mortgage approvals is a far cry from the position at the start of last year, and it is encouraging to see that buyers are finding it easier to get lenders on their side.
“We anticipate that the coming months will see demand increase further still. Buyers typically prefer to move during the warmer months, and in turn this will increase competition and bolster house prices.”
Anthony Kyriacou, krispyhouse.comAnthony Kyriacou, Founder and Chief Executive of krispyhouse.com, says: “Interest rates will almost certainly come down at some point this year, and there is unlikely to be any major expansion in housing supply that would put lasting downward pressure on prices. Expect the resumption of house price growth sooner rather than later.”
But he adds: “In the meantime, this 1% fall will put further pressure on the rents. These five months of growth had offered some respite to this market. Rising house prices reflected the fact that more Brits were willing and able to buy homes due to falling mortgage rates a growth in real wages. This freed up rental accommodation as people moved from rentals into homes of their own. With this fall, this respite will end, and we will need to think seriously about how this market might be reformed.”
FANTASY
And Giles Mackay, Founder of property data firm Outra, says: “Even though house prices have seen a slight decline in the last month, the harsh truth is that unless something drastic is done to boost supply in the right areas, home ownership will remain a fantasy for many generations to come.
Jason Tebb, OnTheMarket“The affordability crisis, which continues to hammer the nation across all property types and tenures, requires a targeted strategy of housebuilding to ensure that supply is boosted in the areas where shortages are most acute.”
Jason Tebb, President of OnTheMarket, adds: “Activity continues to pick up with more enquiries and stock coming to market, as you would expect at this time of year. Buyer confidence is further boosted by cheaper mortgage rates and the expectation that they will come down further.
“However, any price rises will be tempered by what buyers can afford. After many hikes in base rate before it stabilised at 5.25%, borrowers are having to get used to paying more.”
