The housing market has demonstrated its resilience as average house prices edged up by 0.8% in March, following a 1.2% increase in February, according to the latest Halifax House Price Index.
The annual rate of house price growth has slowed to 1.6%, down from 2.1% for the previous three consecutive months.
The average cost of a UK property now stands at £287,880, compared to £285,660 in February.
Kim Kinnaird, director at Halifax Mortgages, said: “The UK housing market continues to show resilience following the sharp downturn at the end of 2022, with average property prices rising again in March (+0.8%). The typical house price is now £287,880, around 2% below the peak reached last August.”
Despite the weakest annual growth rate since October 2019, the market has seen a partial recovery in activity and transactions, with mortgage approvals rising for the first time in six months according to Bank of England data.
Kinnaird added, “The principal factor behind this improved picture has been an easing of mortgage rates.
“The sudden spike in borrowing costs that we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry a typical 5-year fixed rate deal (75% LTV) is down by more than 100 basis points over the last few months.”
Additionally, a strong labour market, low unemployment rate of 3.7%, and robust pay growth indicate support for house prices.
House prices rose across all nations and regions in March, but annual growth slowed in most areas except Greater London and the North East.
Northern Ireland reported the strongest annual growth of 4.9%, followed by the West Midlands at 3.8%.
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Nathan Emerson, CEO of Propertymark:
“Estate agents are seeing a very steady picture. Whilst winter saw a slight decline in activity and therefore prices, spring brought new activity. This trend is normal as the market flows with seasonal changes in buyer behaviour.
“We have plenty of homes coming to the market which shows sellers are confident and that’s the key. Prices have adjusted to rising interest rates curbing affordability, but as we head into April and May, prices may pick up as more buyers will be on the move.”
Adam Smith, director at Northampton-based mortgage broker, Alfa Mortgages:
“The outlook for house prices in 2023 will be heavily influenced by consumer confidence, which in turn will be shaped by a complex interplay of factors including inflation and uncertainty surrounding interest rates. A decline in consumer confidence could lead to a sharper decrease in the value of UK bricks and mortar, but the extent of this remains uncertain and is the million-dollar question on everyone’s mind. There are so many variables at play it’s hard to know where the UK property market is going next.”
Jamie Minors, managing director at Norwich-based estate agents, Minors & Brady:
“UK house prices are still going through a period of correction, which means unrealistic prices that were exacerbated by a poor supply of stock are now re-aligning with demand. With mortgage rates steadily reducing and consumer confidence returning after the disastrous Kwarteng/Truss administration, we are seeing strong levels of demand matching good levels of supply. Unemployment is still incredibly low, so as long as mortgage rates don’t suddenly rise and people still have their jobs, buyers will continue to purchase, resulting in prices holding without further big reductions and a rally upwards in 2024.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“Spring has started strongly with a robust set of house price results, and this coincides with a welcome uptick in demand as mortgage rates continue to ease.
“These are the kind of figures that will give sellers confidence that now is a good time to list their property, though many are also being realistic about pricing and buyers’ expectations for a negotiation.
“All the signs point to the property market emerging from the challenges it has faced since the Mini Budget, with the weather set fair for a strong showing over the next few months, in what is traditionally a very busy period.
“Although demand is increasing, so is housing stock. We’re starting to see signs of a much healthier market in terms of supply and demand than we saw during the mad rush over the last two years.
“In some areas there are many more properties for sale than this time last year when the market was still in the middle of a historic boom in demand.”
Chris Barry, director at Gloucester-based conveyancer, Thomas Legal:
“House prices, despite the recent turbulence, should remain fairly steady throughout 2023. Though demand levels dropped following the mini-Budget, the latest base rate rise may be one of the last for a while, which has increased confidence. Recently, many buyers have come back to the market, something evidenced by the recent increase in mortgage approvals.
“Demand is continuing to grow as confidence and economic stability improve, which may see supply and demand meet in the middle sometime this year, creating the perfect housing market. The market that has pushed on quickly this year is the new build sector.
“We think this is due to a short freeze in building projects during the economic uncertainty in October but we are now seeing a sharp rise in new build properties coming to market and a rise in demand from a broad range of clients. We are also seeing developers offering large incentives to buyers. Developers want to sell and there are still people who want, and are able, to buy.”
Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group:
“London homes are taking an age to sell. It’s currently taking a whopping 44+ days to shift property in the nation’s capital, where prices have been higher than Snoop Dogg on his herbals. It seems sellers in central London are in no hurry to sell, holding out for offers so high they could make Elon Musk’s bank account look like pocket change. But it’s not all doom and gloom in the housing market. The supply of properties is picking up and buyers and sellers are finally seeing eye-to-eye on pricing.”
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:
“Based on what we’ve seen so far in 2023, the Scottish property market could rightly proclaim that “rumours of my death have been greatly exaggerated”. Although not without its challenges, unexpected resilience is evident, with prices generally holding steady.
“As always, the supply versus demand battle is largely dictating market conditions and the eagerness of agents to acquire new stock indicates that an imbalance undoubtedly still exists. First-time buyers remain the most active and with many lenders reducing rates in recent weeks at all levels of loan to value, affordability and borrowing power for many is trending positively.
“It is noteworthy that for buy-to-let, given increasing government intervention in the sector and reduced cashflow, there are unquestionably more landlords selling up all or part of their portfolios. A sudden rise in listings via specialist estate agents selling tenanted properties is evidence of this ongoing landlord exodus.”
Joe Stallard, director of Stroud-based House & Holiday Home Mortgages:
“In some ways, nothing has changed when it comes to the housing market. There have always been fluctuations and we advise our clients to study their local area carefully. It’s true that house prices are down nationally, but this varies from region to region, so keeping a watching brief on what’s happening where you’re looking to buy is the wise thing to do.
“Surprisingly, our business levels have remained strong. People are still searching for the right property, no matter what. Right now, most families are exploring ways to reduce their outgoings overall. And as they fall off fixed rates, they’re finding higher rates are the norm. Having said that, the shock factor has largely been avoided because information about rate rises has been widely available all along.”
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com:
“I don’t see any other outcome than a steep decline in house prices this year and well into next. Mortgage approvals are down over 40% in the past few months, inflation continues to erode living standards and interest rates are still on their upward trajectory. Over the next six months, I believe we’ll see very sharp falls in house prices of 1%-2% a month. The trigger will be the traditional springtime rush to list property for sale. Demand simply won’t match it, as prices are far too high given where mortgage rates are.”
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents:
“Property prices are down but demand has been steadily increasing in the first three months of the year, in particular March. There’s more confidence out there than many think. This shows that while discretionary buyers are sitting tight, the serious buyers remain active.
“Sellers are being much more realistic on price, and are typically also buyers so they appreciate a more balanced property market. Locally, we don’t expect to see the often reported ‘crash’ but can certainly see that a correction of circa 5% is realistic. It’s no secret the market is currently favouring buyers.”
James Briggs, head of personal finance intermediary sales at Together:
“Showing a slight rebound after months of subdued activity, house prices rose from 1.2% to 2% in March.
“With consumer confidence remaining weak, and high inflation continuing to weigh heavily on people’s ability to buy or save enough for adequate deposits, there may be a few months yet until we see any real momentum.
“However, that is not to say all activity has ground to a halt. Opportunities for first-time buyers are still there, particularly through schemes such as shared ownership, or even parental support through family mortgages which are growing in popularity. In these cases, family members can assist with the deposit through their own savings or property. It is worth exploring a options through specialist brokers and lenders, who can often be more flexible in helping borrowers to secure the finance needed to meet their ambitions.”
Rich Horner, Head of Individual Protection at MetLife UK:
“The rise in house prices after the recent downward trend indicates signs of stability and confidence are slowly starting to return to the market. While double-digit inflation and the recent increase in interest rates will likely cause most to continue withholding from making any big property decisions right now, there may be more opportunities in the coming months.
“Whether plans involve doing-up and remortgaging or buying a new home altogether, it’s critical for families to consider how they can best protect themselves through the ongoing uncertainty. Protecting your mortgage repayments in case you falter due to injury or illness will ensure you have a sufficient safety net in place, allowing you to focus on your recovering and overall wellbeing.”
Avinav Nigam, chief investment officer of real estate investment platform IMMO:
“While house prices have risen gently over the past month, they continue on a downward trend over the course of the last quarter. Consumer confidence may be increasing with positive news of mortgage rate stability, but improvement in the sales market is not aiding a growing rental housing crisis.
“With fresh reports of tenants being further priced out of cities, there is an ever increasing need for ‘patient’ capital, such as pension funds, to start investing in the rental market, creating alternative options for Britain’s growing renter population.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Annual price growth remains remarkably consistent as the market gradually returns to something closer to what we were used to pre-pandemic.
“Lenders continue to jockey for position and business with a number reducing the pricing of their cheapest 5-year fixes. Even if there is another base rate rise to come, there is a growing expectation that rates are close to their peak and if inflation falls significantly, as forecast, the outlook will be much more encouraging for borrowers.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“After three successive months of unchanged annual growth, this respected and comprehensive report confirms what we’re seeing on the ground – falling mortgage rates and expectations that the worst for the economy may be behind us have tempted buyers and sellers out of hibernation.
“At the sharp end, sales are still being agreed but are taking longer, not least because there’s more choice of stock.
“Looking forward, we don’t expect to see a dramatic change as we enter the key spring period for the housing market. However, buyers and sellers utilising excess savings made during the pandemic, seeking smaller three and four-bed houses in particular, are certainly leading the way.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The slowdown in house prices seems to have levelled off in recent months, with figures showing modest growth despite gloomy forecasts towards the latter end of last year.
“The picture is still mixed as these figures show a brighter prospect for sellers than some other measures of house prices.
“Sales are holding steady and many estate agents are now enjoying the benefit of having more properties on their books following a shortage of stock in the last year. This is good news for buyers, as it gives them more choice and a better chance at securing the right home.
“Despite a significant fall at the end of last year, the price of an average home is now creeping back up to almost £288,000. While this is good news for sellers, many first-time buyers will be disappointed to see prices increase at a time when other household costs are increasing too.
“Buyers must be reassured that now is still a good time to buy, especially as rent levels continue to rise to unaffordable levels in many areas.”
Carl Howard, Group CEO of Andrews estate agents:
“A second straight monthly property price rise suggests a spring bounce, led by sellers who have stepped up and kept this market ticking over.
“They’ve had a few months now to adjust their eyes to a gloomier outlook, and a realistic attitude on prices is helping grease the wheels and get more deals over the line.
“Meanwhile demand for properties is creeping up from a low base as buyers warm to a market moving in their direction and make more enquiries.
“Although interest in homes is down from the same time last year, sales are being supported by a boost in supply, particularly in cheaper price brands. Mixed with a surge in rental prices, this should also encourage more buyers into the market.
“There are still storm clouds lingering, particularly around affordability, but lending rates are continuing to soften, meaning less of a jolt for first-time buyers and owners whose current fix is coming to an end.”
Iain Crawford, CEO of Alliance Fund:
“Further positivity for the UK property market as we continue to move away from the uncertainty spurred by September’s mini-Budget and towards what is a far more positive outlook for the year ahead.
“While the higher cost of borrowing will continue to have an influence, buyers are returning and while they are doing so at a more measured pace, this uplift in market activity is now starting to blossom into green shoots of positive house price growth.”
Marc von Grundherr, director of Benham and Reeves:
“Those of us on the ground have seen a sustained level of market activity since the start of the year and it was only a matter of time before this initial interest started to restimulate the market, reversing the reduction in house prices seen during the latter stages of last year.
“Homebuyers may not be moving with the same gusto seen during the pandemic boom, but stability has returned and the boat has well and truly steadied.”
James Forrester, managing director of Barrows and Forrester:
“It’s high time that those spouting prophecies of a property market crash and a 40% reduction in house prices are held accountable. Not only has the market weathered the storm of higher borrowing costs and the cost of living crisis, but house prices have already started to rebound following just a few short months of marginal decline.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“The expectation was that 2023 would see an end to the downward trend of house price decline that followed last September’s mini budget. This seems to have rung true far earlier in the year than many expected although the landscape remains fairly uncertain.
“An eleventh consecutive interest rate hike is sure to further dampen the enthusiasm of the nation’s homebuyers and while it shouldn’t deter them completely, it’s likely we will see more incremental house price gains over the year ahead, rather than the record high rates of previous years.”
Karen Noye, mortgage expert at Quilter:
“The latest house price index from Halifax shows prices continue to defy the odds with a further 0.8% month-on-month uptick in March, following a 1.2% rise in February.
“While prices increased in March, the annual rate of house price growth fell to 1.6% down from 2.1% in the previous three months – the weakest rate of annual growth for more than three years.
“Given the predictions of a major drop in house prices in 2023, the housing market so far appears to have weathered the storm far better than had been anticipated. The fall in mortgage rates compared to the peak seen at the end of last year appears to have boosted buyer confidence, and this is likely to be holding off a significant fall in prices for now.
“However, while the market appears to be resilient at present, there remain considerable pressures that could bring further turbulence throughout the year. Inflation rose unexpectedly in February, and the Bank of England further increased its base rate in response. For those currently sitting in ‘wait and see mode’, the ongoing unpredictability of the market and wider economy will be concerning and they may look to hold off further until there is a clearer path ahead.
“What’s more, high energy bills and increased mortgage rates will leave many homeowners struggling to keep up and needing to cut back on spending elsewhere, and many will find it more difficult to secure a mortgage due to affordability criteria. In a time of financial uncertainty, it is likely that potential home buyers will be hesitant to make such a significant investment, and this could have a knock-on effect on demand. If this continues, we can expect the shift in supply vs demand to result in a dip in prices in the coming months.
“Despite the ongoing challenges, there is still opportunity out there for those looking to buy or sell a home. For those selling, it is important to be realistic about the current market conditions and adjust pricing expectations accordingly. For those hesitant to buy, if you feel financially secure it may still be worth making the leap despite the costs that come with moving. If interest rates do climb higher, you may be able to lock into a cheaper deal now than in the future.”
