In March 2024, UK house prices saw a slight annual increase of 1.6% compared to the same period last year. This is a modest uptick from February’s 1.2% annual growth. Despite a monthly decline of 0.2%, as per the seasonally adjusted figures, the broader trend points to a stabilizing market.
Robert Gardner, Nationwide’s chief economist, provided insights, stating: “UK house prices fell by 0.2% in March, after taking account of seasonal effects. Nevertheless, the annual rate of house price growth edged higher to 1.6% in March, from 1.2% in February.”
The report highlights a mixed regional performance. Northern Ireland led with a 4.6% increase in house prices, making it the best-performing region. Conversely, the South West lagged, with a 1.7% decline over the year.
Gardner elaborated on the market’s dynamics: “Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards.” He noted the impact of higher interest rates on affordability, despite them being lower than the peaks of mid-2023.
There’s a silver lining, as Gardner pointed out: “With cost-of-living pressures easing as inflation moves back towards target, consumer sentiment is improving.” This improvement, alongside income growth outpacing house price growth, suggests a gradual enhancement in housing affordability.
Looking forward, Gardner commented on the potential market trajectory: “If these trends are maintained, activity is likely to gain momentum, though the pace of the recovery is still likely to be heavily influenced by the trajectory of interest rates.”
The quarterly regional house price statistics further underscore the uneven recovery across the UK. While all regions saw an improvement in the annual rate of change in the first quarter of 2024, disparities persist, with some areas experiencing price declines and others, like Northern Ireland and the North of England, witnessing significant growth.
Reaction
Hannah Bashford, director at Model Financial Solutions:
“There’s no doubt that the trajectory of interest rates will be key to the recovery of the property market moving forward. If the Bank of England cut rates in the next few months, this will definitely help to stimulate the market and we’ll see more people moving again, which will help to boost house prices. We’re finding more people are coming to terms with the idea of higher interest rates so are moving on with their lives and this means the market hasn’t stalled as it was expected to. We’ve seen a couple of remortgage properties subject to down valuations, but in an uncertain market we often see surveyors valuing properties cautiously. House prices in both Surrey and the South Hams seem to have held their own.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“As the Nationwide points out, all eyes are on interest rates and above all Threadneedle Street. But there’s no doubt that the first quarter of 2024 was far more active than the final quarter of 2023. Last year was challenging, and defined by muted demand, but sentiment is improving by the day. On the mortgage front, there was March madness with multiple lenders making opposing rate moves on the same day so it’s no surprise the market fell slightly last month. Even if the Bank of England keeps the base rate at its current level until mid-year, when that first cut comes it could turbocharge activity levels.”
Emma Jones, managing director at Whenthebanksaysno.co.uk:
“Yes, activity levels remain subdued by historic standards, but sentiment is starting to improve. A base rate reduction by the Monetary Policy Committee would be welcomed and could encourage many more buyers to make their move. As we enter the second quarter, I feel more first-time buyers will be confident to move. This is being helped by lenders like the Yorkshire injecting confidence into that corner of the market with their £5000 deposit product. A lot of would-be buyers were hanging on for the Budget to give them a helping hand, which didn’t come.”
Ranald Mitchell, director at Charwin Private Clients:
“Though the Nationwide index shows a slight dip in March, a month of data does not a market make and the annual growth figure continues to improve. Activity among buyers has been booming in the first few months of 2024 compared to the last quarter of 2023. A combination of mortgage product innovation, reduced deposit requirements from some lenders, pent-up demand and an urgent sense of catching the wave before property prices run away again, has mobilised buyers in numbers.”
Bob Singh, founder at Chess Mortgages:
“Business was brisk in the residential property market during the first quarter and this trend is likely to continue into the rest of the year. The confidence in the markets can be evidenced by lower swap rates. There have been a number of 99% and 100% loan-to-value products in various guises along with some easing of criteria in the the buy-to-let market. There are still some choppy waters ahead so caution should be exercised.”
Andrew Montlake, managing director at Coreco:
“The market in the first quarter of the year has been bustling compared to the tumbleweed of the previous quarter. After the Easter break, I suspect we will see a further rise in activity as pent-up demand from buyers, further buoyed by the easing of mortgage rates and criteria, prevent property prices from falling further.
“Add to this a handful of lenders who have at least made an attempt at innovative new products, and expectation of another Government scheme, and the property market will continue to confound those consistently, and wrongly, predicting wholesale doom. As sentiment improves, this in itself will see more buyers hit the market as they will not want to miss the boat before house prices, especially in high demand areas, begin to stabilise and rise once more, albeit at a slower pace than in previous years.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“What happens next with mortgage rates could have a significant impact on property market activity and ultimately house prices.
Buyers and sellers have been more active since the start of the year as it looks as though base rate has peaked, and the next move in rates will be downwards. However, affordability is still an issue for many, thanks to many consecutive rises in base rate before we got to this point, along with the elevated cost of living, particularly energy costs and food.
“There are likely to be ups and downs in mortgage pricing in the weeks and months ahead as lenders jostle for position and business but there is a growing feeling of optimism that the situation is improving overall, which will be welcomed by hard-pressed borrowers.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“The persistent supply/demand imbalance, which is particularly evident across London, along with better mortgage rates since the turn of the year, are supporting overall market strength and stability.
“In line with what we are seeing on the ground, Nationwide’s latest house price index points to an upwards trajectory in property prices.
“The sales market continues to pick up some momentum with committed buyers and a strong pipeline of serious applicants boding well for the spring market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Though only a modest rise, we again see the housing market demonstrating its resilience, bearing in mind these figures do not include cash purchases which make up around 40% of the total.
“Price movements are important, especially in such a long-established report, as they have a significant impact on buyer confidence.
“We are finding in our offices that prices are fairly steady, mainly down to hard bargaining and more choice than any big change one way or the other.”
Tomer Aboody, director of property lender MT Finance:
“Another rise in house prices underlines the confidence being felt in the market.
“Stable interest rates, more favourable mortgage rates than this time last year and less than half the inflation, are persuading buyers that it is time to make their move as the traditionally busier spring market picks up.
“All-important transaction numbers are also rising, albeit from a low base, demonstrating increased confidence among buyers that the worst of the uncertainty and market turmoil may be behind us. Transactional volumes should increase further as sellers take advantage of this stability.”
James Briggs, head of intermediary sales at mortgage lender Together:
“The dip in house prices certainly detracts from the initial positive signs of market recovery. However, given the lower-than-expected inflation figures earlier this month, and early indications that rates are starting to creep down, there should be ample opportunities for those wishing to get a foot on the housing ladder this year. There’s also no let-up in the desire from would-be property owners, with our own research finding 69% of millennial first time buyers have homeownership aspirations in the near-term; regardless of the current economic climate.
“Indeed, increased confidence among buyers, sellers and property professionals suggests the property market is now finally moving in the right direction.”
David Hollingworth, associate director, communications at L&C Mortgages:
“Nationwide’s figures show a monthly drop in prices but the positive annual growth demonstrates some signs of renewed activity in the market, despite what could be seen as a mixed picture for house prices.
Interest rates have understandably been at the heart of the subdued housing market in the face of periods of extreme volatility and higher cost of living. Mortgage rates have dropped substantially, and the lowest 5-year fixed rates now sit around 1% lower than last summer.
Borrowers are readjusting their expectation from the ultra-lows of the last decade. As the rate of inflation continues to fall and the likelihood of a cut in base rate gathers momentum, there should be a continued, gentle boost to confidence that will see activity continue to pick up and make for an improved market as the year progresses.“
Karen Noye, mortgage expert at Quilter:
“Although prices have surprisingly edged down in March, they still have increased on an annual basis by 1.6%, according to the latest Nationwide house price index.
“We’ve grown accustomed to house prices returning to an upward trajectory, so this slight dip will be cause for concern for homeowners. However, with a traditionally busier period just starting it is unlikely this trend will continue. Similarly, the annual increase is remarkable given how subdued the market has been.
“This annual increase should serve as a serious wake up call to government, highlighting the real-world impact of repeatedly missing house-building targets. Given the lack of demand due to the cost-of-living crisis, house prices should have decreased but because there is such little housing stock, prices continue on an upward course.
“As interest rates are set to decrease again and demand expected to pick up during spring, this small monthly dip in prices is likely to represent a blip rather than a trend.
“House price inflation has often been positioned as a good news story but younger generations are now facing such an uphill battle to get anything like enough money together for a deposit a further increase will be worrying. Wage growth simply fails to keep up with house price growth and there is a real worry that there will eventually be a generation that enters into retirement needing to have enough in their pension to pay for their living expenses but also for rental costs. This represents a tall order.”
