Halifax data shows a mixed picture
UK house prices grew in March by 2%, on a quarterly basis, though the price of a UK property fell by -1% or £2,908 in cash terms, according to the latest Halifax House Price Index.
Annual growth slowed to 0.3%, from 1.6% in February, with the average property costing £288,430.
Kim Kinnaird, director of Halifax Mortgages, said: “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. 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.”
She added: “The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost-of-living squeeze.”
Is the housing market recovering?
Karen Noye (pictured), mortgage expert at wealth management business, Quilter, commented: “The UK housing market is currently navigating through a phase of cautious recovery, a period characterised by moderated growth and as shown this morning the occasional drop in prices.
“The early surge in price increases seen at the start of the year is now showing signs that it was not as robust as once hoped, indicative of a market adjusting to significant economic pressures. However, a spring surge as a result of a revived buyer confidence may help house prices to increase at pace again.
The dynamics of the mortgage market have played a pivotal role in shaping the current state of the property market. Initial cuts in mortgage rates sparked a renewed interest among potential buyers and movers, who had previously adopted a wait-and-see approach due to the financial uncertainties of 2023. However, the subsequent slowdown in rate reductions by lenders has served to keep property price rises in check.”
She continued: “Looking ahead, the anticipation surrounding the Bank of England's monetary policy decisions will have its own like positive impact on the market. With expectations leaning towards a reduction in interest rates in the not-too-distant future, there's a sense of optimism about the market's direction. However, this should be tempered by the fact that the market is incredibly sensitive to broader economic indicators and one hiccup can cause a significant downward reaction.
“The interplay between mortgage rates, economic policies, and buyer sentiment is shaping a landscape where stability is the desire right now and if we can get some semblance of that house prices are likely to start to increase again in line with demand.”
