UK house prices fall for first time in 3 months but data may show recovery is accelerating (Sebastien Mercier via Getty Images)
The UK kept interest rates unchanged, high mortgage rates impacted the market, and property prices fell for the first time in three months.
Nationwide’s national house price index showed house prices fell 0.2% between February and March, although they were still up 1.6% compared with the same period last year. The average domestic house value is £261,142 (equivalent to HKD 2.57 million).
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Since August last year, the Bank of England’s benchmark interest rate has been as high as 5.25%, and buyers have been affected by the interest rate.
Robert Gardner, Nationwide’s chief economist, said: “Economic activity has recovered from the slump in late 2023, but it remains relatively weak by historical standards.
“For example, the number of mortgages approved in January was about 15% below pre-pandemic levels. This largely reflects the impact of rising interest rates on affordability.”
Northern Ireland remains the best-performing region in the UK in the first three months of the year, with prices rising 4.6% compared to the first quarter of 2023.
Overall, England’s GDP rose slightly by 0.4% compared with the same period last year, while Wales’ GDP rose by 1.2%. House price growth in Scotland accelerated by 3.7%.
London remains the most expensive city in the country, with average property prices at £519,000, up 1.6% year-on-year but down 2.4% month-on-month.
Kate Steere, housing expert at personal finance comparison website finder.com, said: “Today’s data shows we are still in trouble. While mortgage rates have fallen and salary growth has outpaced inflation, buyers remain concerned about affordability, resulting in demand. Still suppressed.”
“The Bank of England’s decision to keep interest rates on hold has dampened the recovery in house prices. At the same time, half of experts think the Bank will wait until June 2024 to cut interest rates, meaning we may only see house prices in the coming months. Slow recovery,” she added.
Mortgage advisers have called on the Bank of England to cut interest rates after falling house prices.
Emma Jones, managing director of whenthebanksaysno.co.uk, said: “Yes, activity in the property market is still lower than historical averages, but market sentiment is starting to improve. A reduction in the base rate by the Bank of England would be welcome and may encourage more buyers. Take action.”
Hannah Bashford, director of Model Financial Solutions, said: “If the Bank of England cuts interest rates in the coming months, it will definitely help stimulate the market and we will see more people moving again, which will help boost property prices.”
However, the latest data suggests that the UK housing market may be showing signs of accelerating recovery. Mortgage approvals rose to more than 60,000 in February this year, the first time since former Prime Minister Alexis Cherish’s mini-budget incident plunged the housing loan market into crisis.
Data from the Bank of England show that 60,400 mortgages were approved in February, the most since September 2022, a month-on-month increase of 7.7%, and a year-on-year surge of nearly 40%.
Shaun Sturgess, director of Sturgess Mortgage Solutions, said: “Although banks have different adjustments to interest rates, strong demand from buyers who bought cars may be the main reason for the increase in this data.”
However, Capital Economics UK economist Ashley Webb warned that the rise in mortgage lending was “unlikely to be sustained in the short term”.
2024-04-03 04:18:45
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