UK house prices have shown resilience, with a modest monthly increase of 0.1% in April, following a 0.9% decrease in March, according to Halifax. The average house price now stands at £288,949, up from £288,781 the previous month, reflecting a slight annual growth of 1.1%, compared to 0.4% in March.
Amanda Bryden, head of mortgages at Halifax, commented on the trends: “UK house prices held steady in April, rising on a monthly basis by just +0.1% (less than £200 in cash terms). Annual growth rose to +1.1%, from +0.4% in March, though this can be attributed to the base effect of weaker price growth around this time last year.”
The report highlights that the stability in house prices is indicative of a market adjusting to higher interest rates and improving buyer confidence. This is supported by an increase in mortgage applications and the highest level of mortgage approvals in 18 months. Halifax’s research also indicates that first-time buyers are adjusting their expectations by opting for smaller properties, which has led to a noticeable price increase for flats.
Bryden added, “However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals.”
Regionally, Northern Ireland continues to lead with the strongest price growth, though it has slowed slightly from previous months. Properties in Northern Ireland now average at £192,502, marking a 3.4% increase from last year. The North West of England also showed robust growth, while price declines were more notable in the south, particularly in Eastern England.
The London market remains the most expensive, with an average property price of £539,336, though prices have remained relatively flat over the year.
Reaction
Ranald Mitchell, director at Charwin Private Clients:
“The housing market is less finding its feet than being knocked off them. It came out of its corner swinging in early 2024 but has since been hit by a stinging haymaker of mortgage hikes. Despite ample listings and steady traffic at viewings, prospective buyers are holding back, waiting for more favourable conditions, paralysed by spiralling mortgage costs. The crisis of confidence among first-time buyers and home movers alike will only be solved by a now overdue base rate cut, which could be the lifeline needed to revive and strengthen the faltering market.”
Harps Garcha, director at Brooklyns Financial:
“To say affordability is a significant challenge is an understatement. 2024 kicked off on an extremely positive note, however the slow but relentless rise in mortgage rates from the tail end of January has seen confidence really start to dwindle. First-time buyers and homeowners were raring to go at the start of the year, full of confidence, but now they are feeling the pinch as mortgage costs shoot up, with many having to put their dreams of buying or moving hold. Those still in the hunt for their dream home are struggling with the ongoing lack of housing stock, which is at least preventing property values from taking a nosedive. The Bank of England needs to step up and cut the base rate to give the market the boost it desperately needs.”
Dariusz Karpowicz, director at Albion Financial Advice:
“To predict modest growth in 2024 in current market conditions is slightly bullish. Rising mortgage rates are undoubtedly tightening the screws on both market sentiment and demand, testing an already strained UK housing market. From what we’re seeing, there’s a slight downturn in property prices, with Nationwide reporting a contraction last month. This shift might suggest that buyers have gained some leverage in recent months. However, the full impact and whether sellers are adjusting their price expectations realistically is still mixed across regions. To rekindle confidence and boost transactions, more favourable lending conditions, and perhaps even Government incentives, are needed. Currently, the market is navigating a phase of caution, with no immediate positive signals on the horizon.”
Graham Cox, director at Self-Employed Mortgage Specialist SEMH:
“We’re finding many homeowners want to move, but are waiting for mortgage rates to fall. At the moment, they’re going the other way, though it’s surely only a matter of time before the Bank of England cuts the base rate. First-time buyers of course, face the triple-whammy of high house prices, large deposit requirements, and high mortgage rates. Until conditions change and they return to the market in greater numbers, I expect house prices to slide.”
James Mason, owner at Hawksman Real Estate:
“Activity levels and demand are definitely on the up as the Halifax observes. They’re through the roof in Surrey given the sheer amount of pent-up demand in the market at present but many buyers are hesitating when it comes to that final step of committing and seeing through the purchase. As soon as lenders start to drop mortgage rates, we will see a stampede and I suspect house prices will start to rise again so the modest growth prediction may not be far off the mark. All eyes are on the Bank of England but that first cut may not come quite yet.”
Andy Keehner, managing director, property finance at Finanze Group:
“There’s no need to hit the panic button just yet. While the 5-year SONIA rate has inched up by approximately 25bps over the past month, creating a shift in borrowing costs, experts predict a more measured approach to future Bank of England base rate adjustments. Interestingly, despite last year’s significant interest rate hikes, sellers held their ground against pressure for price reductions. This resilience led to a realisation: the market wasn’t budging, prompting investors to re-enter the fray. Now, the spotlight shines on strategies to enhance property value, with tactics like BRRR (Buy, Refurbish, Rent & Refinance) taking centre stage. Moreover, innovative opportunities abound, including our own title split product and savvy manoeuvres like snapping up short-lease properties and negotiating extensions. The game is evolving, and it’s all about seizing these value-adding chances!”
Ross McMillan, owner/mortgage advisor at Blue Fish Mortgage Solutions:
“Considering the interest rate pressures and volatility over the last couple of years, it remains a modern day miracle that the Scottish property market continues to show no sustained signs of any softening in prices. The supply continues to be limited, while demand, especially from first-time buyers, remains consistently strong. Consequently, bidding wars and closing dates remain common, with the majority of properties fetching prices 10-15% above their home report values. This trend is prevalent across most areas, with hotspots like Glasgow and Edinburgh experiencing even steeper hikes, sometimes up to 30% above mortgage valuations. While mid-range modern homes may occasionally experience slower movement, accurately priced properties are still selling well. Despite indications suggesting that interest rates won’t drop as swiftly as had been anticipated earlier in the year, it appears that 2024 will yet again be another prosperous year for the Scottish housing market.”
Karen Noye, mortgage expert at Quilter:
“The slowdown in the housing market continues to have an impact on house prices, though this morning’s house price index from Halifax paints a marginally more positive picture than Nationwide’s equivalent. Halifax reported that house prices grew 0.1% in April following a 0.9% fall in March, while on an annual basis, prices grew by 1.1%.
“The differing views reported in the various house price indices show just how unpredictable the property market remains. Though Halifax reports an increase, the growth in house prices is hardly anything to write home about given we would typically expect sales to gain momentum in the spring, and for house prices to rise as a result. However, so far this year that has not been the case as monthly property transactions have been remarkably subdued.
“What’s more, mortgage rates have been gradually increasing, so we can expect transactions to remain dampened for some time yet. When combined with the ongoing cost of living pressures, many prospective buyers will struggle when it comes to affordability, particularly those first-time buyers who will also have found it much harder to save enough for a deposit.
“All eyes will be on the Bank of England as it gears up to announce its latest monetary policy decision later this week. Though it is not expected to declare a shift in stance until later in the year, things are beginning to look a little more positive and we could see a turning point for the property market as we approach the summer months. An interest rate cut would present a more favourable borrowing market and would likely help reignite demand given many people are holding off in hopes of lower rates and reduced affordability pressures.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“Our offices are busier, with a significant uplift in viewings.
“Well-finished properties are having the most appeal, due to uncertain building costs and the difficulties in finding a builder in the first place.
“First-time buyers in particular are finding it difficult to raise deposits and are relying on the Bank of Mum and Dad more than ever to buy, especially in London.
“We expect the housing market to continue to strengthen until the summer, subject to no snap general election being called or mortgage rates rising too significantly.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Borrowers have benefited from cheaper mortgage rates since the start of the year, which has boosted market activity and enquiries.
“Since then, higher funding costs have led to higher mortgage rates over the past couple of weeks and there is likely to be some volatility in pricing ahead. Borrowers would be wise to secure a rate they like the look of to protect themselves from further price fluctuations in the short term.
“Once the Bank of England is confident inflationary pressures have eased and starts cutting interest rates, this will provide a welcome boost for the market and should help increase confidence and activity.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“We are not surprised to see house prices up a bit, then down a bit – a pattern which we are finding is repeated on the ground, reflecting that some sellers are more realistic than others.
“The market has lost a little momentum in the last month or so which has chimed with recent modest increases in mortgage rates as well as listings. However, underlying confidence remains fairly strong for now at least, allowing purchasers the opportunity to perhaps negotiate a little harder where possible.”
Gareth Lewis, managing director of property lender MT Finance:
“The housing market desperately needs some stimulus, giving buyers and sellers more confidence to transact. The slight uptick in prices compared with March suggests there is a level of confidence in the market but it only goes so far with not enough properties coming to market or buyers able and willing to transact.
“The housing market is a work in progress. Prices haven’t fallen off a cliff, which is encouraging, but some form of stamp duty stimulus would really boost activity and transaction numbers, which are far more important than prices.”
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“It might look like house prices have stabilised, staying relatively flat over the first four months of 2024, but look a little closer at the annual figures and the market is wonky – with the north/south divide seeing prices climb in the north and drop steadily in the south.
“This is a function of the fact that mortgage rates remain so stubbornly high. Banks are pricing in the fact that the Bank of England’s cuts are expected later than they had hoped for earlier in 2024. At the end of April, the average 2-year fixed rate mortgage had crept up to 5.87% – from 5.8% at the end of March. It’s not a dramatic move, but it’s in the wrong direction, and it’s coming at a time when homeowners expected mortgage rates to be dropping.
“In the south, prices tend to be higher – the priciest are in London where the average home costs £539,336. It means mortgages are bigger, and so higher rates hit harder. Buyers are having to wait, and hope that rates fall, in order to afford the kind of property they really want to live in – or lower their ambitions and buy somewhere they can bear to live with instead. As a result, demand is down, and property prices are level or falling.”
James Briggs, head of intermediary sales at Together:
“The latest house price growth figures indicate that the property market is on the up, and with the Bank of England’s interest rate decision coming imminently, many will be hoping for a base rate drop to further boost confidence and the wider economy.
“Regardless of the BoE’s decision, there will still be a considerable cohort who are in a position to press ahead with property plans, taking advantage of alternative ways to secure the finance if they need to do so.
“For those needing to access funds quickly, or find they’re awaiting the sale of an existing property, bridging loans could be a good alternative option. Many aspiring homeowners are also utilising schemes like Right-To-Buy and shared ownership to take their first steps onto the property ladder. For these buyers, it’s always good to speak to a mortgage advisor who can provide guidance on your finance options.”
