Average house price annual inflation was 1.8% in the 12 months to March 2024, compared with -0.2% in the 12 months to February, according to HM Land Registry.
The average house price was £283,000 in March, £5,000 higher than 12 months ago.
Average house prices in the 12 months to March increased in England to £299,000 (1.0%), in Wales to £214,000 (1.3%) and in Scotland to £192,000 (6.7%).
The average house price increased in the year to Q1 2024 to £178,000 in Northern Ireland (4.0%).
On a non-seasonally adjusted basis, average house prices increased by 0.7% between February and March, compared with a decrease of 1.2% during the same period 12 months ago.
Of the English regions, annual house price inflation was highest in Yorkshire and the Humber, where prices increased by 5.0% in the 12 months to March 2024.
London was the English region with the lowest annual inflation, where prices decreased by 3.4% in the 12 months to March 2024.
Reaction:
Nathan Emerson CEO of Propertymark:
“The housing market is a key indicator regarding wider economic health, and it is extremely positive to see further uplift and confidence within the housing sector.
“As inflation tracks downwards, it is widely anticipated the Bank of England will consider a reduction in its base rate and at this point we hope to see lenders offering a much wider range of competitive and highly targeted deals.”
Richard Harrison, head of mortgages at Atom bank:
“The increase in house prices reported today brings to an end a long run of falls, and marks a clear turnaround in confidence among buyers.
“While inflation has fallen by less than expected today, denting hopes of an imminent reduction in base rate, the reality is that cuts are coming and that is bringing would-be purchasers back to the market.
“Asking prices at a record high is a signal of pent-up demand, with the number of sales agreed in the first four months up by 17% on the same period last year.
“This is borne out by figures from Propertymark showing that estate agents are seeing increases in the number of would-be buyers registering with them.
“This growing demand has already translated into house price increases reported by the Halifax and Nationwide indices, and it was only a matter of time before this was reflected in ONS reports given the lag in the data.
“It’s important to note that this increased appetite is coming not only from those with spotless credit histories, but also ‘near prime’ borrowers, those who may have had the odd payment blip in their past but who want to push on now with a purchase.
“Given the current cost-of-living crisis it’s crucial that lenders look beyond the black and white of a credit score in order to better support such buyers, and offer them a path onto the property ladder.”
Arjan Verbeek, CEO of Perenna:
“Rising prices continue to push first-time buyers one step further away from becoming homeowners.
“Many are trapped in the rental market due to overbearing and outdated mortgage lending regulations, instead putting their hard-earned deposit savings towards paying off expensive rent. It’s a never-ending spiral.
“New regulation is needed to help those getting left behind. By taking a more nuanced approach to regulations such as the loan-to-income ratio, which blocks safe lending products like long-term fixed rate mortgages from their full potential, we can help encourage product innovation.
“This needs real engagement from Government, regulators and lenders to make the careful, yet impactful, changes needed to improve outcomes for home buyers.”
Ben Waugh, managing director at more2life:
“As we welcome warmer days and start to think about summer, the market continues to show its resilience.
“Although the Bank of England has thus far steered clear of a base rate cut, an increase in house prices in the year to March is a clear indicator that buyers aren’t about to give up on their home owning dreams.
“When the Bank of England moves forward with lowering its base rate, which may happen this summer, better interest rates in the mortgage market will be sure to spark a significant uptick in activity.
“For all the positivity we can take with us into the rest of the year, we cannot dismiss long-term economic trends that are conjuring up new challenges.
“A cost-of-living crisis and underwhelming wage inflation have stretched consumer finances. In the face of near record high house prices, many are turning to ultra-long mortgages to get over the line.
“With more borrowers seemingly prepared to contribute some of their retirement income to make repayments at an older age, advisers must step in at an earlier stage to spell out how this can be managed.”
Daniel Normal, CEO of APRAO:
“When it comes to the returning health of the UK property market it’s fair to say it’s been driven very much by the nation’s housebuilders and the new homes sector, rather than the purchase of existing stock by homebuyers.
“New-build house price growth has far outperformed the rest of the market for many months now and this suggests that while buyers may remain restricted by the issue of higher mortgage rates, they are willing to pay the premiums attached to new-build homes in order to reap the benefits they offer.”
Ed Phillips, Lomond CEO:
“House prices have continued to creep up on a monthly basis as market confidence has grown, however, we’ve also seen the first annual rate of growth since June last year, which suggests that the market is very much heading in the right direction.
“So while homebuyers are still facing substantially higher borrowing costs, the outlook for the year ahead remains a positive one, particularly now that inflation has eased and an interest rate cut is on the horizon.”
Marc von Grundherr, director of Benham and Reeves:
“We’ve seen consistent growth in mortgage approval levels throughout 2024 so far and while house prices have stood firm, it was only a matter of time before this initial indicator of improving market health started to drive a stronger rate of growth.
“The first annual increase since last summer suggests that this is now starting to materialise and while we expect a more settled year as a whole, there’s a good chance that a summer interest rate reduction could spark a house price boom, as buyers are buoyed by the first signs of improving borrowing affordability since March 2020.”
Verona Frankish, CEO of Yopa:
“Despite the disappointment of yet another hold on the base rate, homebuyer activity has been building throughout the spring as many look to make their move in what is expected to be a far more positive year for the UK property market.
“This growing positivity is now filtering through to sold price values and with a rate cut now expected in the coming months, we anticipate the property market to heat up over the summer, although we don’t share the same confidence when it comes to the British weather.”
Ruth Beeton, co-founder of Home Sale Pack:
“The latest house price figures suggest that the market is very much on the up and activity has been building for some months now.
“We’re already in a very different place compared to March which these latest figures relate to and so we can expect to see further positive growth over the coming months.
“For those considering a move, it’s best to act sooner rather than later.
“The process of selling a home remains a cumbersome one, particularly when it comes to the archaic conveyancing process.
“So you can rest assured that as market activity builds, so will the backlog of transactions waiting to complete, resulting in longer delays for both buyer and seller.”
Josh Skelding, commercial director at Fignum:
“It’s certainly a positive sign that average asking prices are continuing to rise, with today’s data suggesting that the market is reaching a stable equilibrium.
“Demand has continued to heat up with the backlog of movers put off by last year’s volatile mortgage rates fuelling mortgage activity and putting upwards pressure on house prices.
“As we head into the spring and summer months, typically characterised by increased home listings compared to other seasons, the market looks set to remain buoyant.
“In addition, lenders are responding to optimism in the markets and the decline in swap rates has recently prompted three major lenders to cut rates to fixed rate products, providing another much-needed boost for borrowers.
“As lenders continue investing in innovation to address the ever-complex needs of the market, utilising mortgage tech can facilitate real-time pricing decisions and ensure brokers are armed with a toolbox of the most up-to-date products to offer clients.”
Holly Tomlinson, financial planner at Quilter:
“In the year to March 2024, UK house prices increased by 1.8% on a seasonally adjusted basis according to the latest government house price index, up considerably when compared to the 0.2% decrease in the 12 months to February 2024.
“On a monthly basis, prices lifted by 0.7%. This left the average house price sitting at £283,000, up by around £5,000 compared to the same time last year.
“Although this increase shows that the housing market is managing to plod along despite significant economic headwinds, it continues to be unpredictable.
“High interest rates alongside ongoing cost of living pressures have continued to put the brakes on a more significant rise in house prices.
“Mortgage rates have fluctuated over the past few weeks due to upticks in swap rates, though this has been tempered by lenders trying to remain good value against their competitors.
“As a result, buyers have been reluctant to come to market during this period of volatility when having the rug pulled out from under them is a real possibility.
“This has led prospective buyers to be in a state of paralysis waiting until rates have decreased to ease affordability pressures.
“Nonetheless, this morning’s inflation figures have painted a more optimistic outlook for the housing market, as headline inflation has now fallen to 2.3%.
“Lenders will now be more inclined to lower mortgage rates, as this fall in inflation should make the path to lower interest rates clearer for the Bank of England. A more stable outlook coupled with lower mortgage rates could be a recipe for more demand and higher prices.”
Michelle Lawson, director at Lawson Financial:
“Landlords, pressured with taxation, regulation and higher interest rates, are leaving the sector in their droves, which is reducing the available stock for tenants and driving up rents.
“As a result, I’m slightly surprised by this data. On the sales front, there is definitely more activity and things are starting to pick up but we need that first base rate cut from Threadneedle Street to really get things going.
“Sadly we may have to wait a little longer after this morning’s inflation data.”
Harps Garcha, director at Brooklyns Financial:
“Though rents have come down slightly according to this data, they’re still painfully high for many tenants.
“Landlords are finding it difficult to achieve profitability and the reduction in rental properties is tightening the rental market, increasing competition and making conditions extremely challenging for tenants.
“Both the sales and lettings market will remain under pressure until mortgage rates start to come down.
“Though house prices are up compared to the previous month, the property market’s pulse remains closely tied to the rhythm of mortgage rates.
“When mortgage rates begin to fall materially, that could breathe life into the stagnant sales market. But inflation coming in slightly higher than expected may just have delayed things on that front.
“Despite increased interest from first-time buyers and home movers, high costs and limited housing stock are hindering their ability to purchase, while home movers are struggling to sell their existing properties.”
Simon Bridgland, broker and director at Release Freedom:
“I’m surprised that rents have come down. The estate agents I speak to are all seeing an increase in available property, largely due to landlords calling time on their property portfolios.
“This reduction in rental stock is piling further pressure on tenants and sending rents spiralling upwards.
“Not knowing how long you stand to remain in your home really is also an awful stress on families beholden to the motives of private landlords, who themselves are feeling pain.
“It’s in this situation that the private landlord gets to understand the risk of investing directly in bricks and mortar.
“Many now realise it isn’t perhaps the golden goose they thought it was.
“They are at risk, just as any homeowner is, of price and interest rate fluctuations, but they have the added default risk from tenants.
“So with net yields around the 4% to 6% mark, is it any wonder some are seeking the shelter of deposit based accounts to achieve similar returns without the relentless downsides to landlordism?”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“The property market overall is steady, with pent-up demand building and growing levels of stock for sale.
“People have recalibrated to the new rate environment and that’s likely reflected in the pick-up in average annual house prices.
“The property market is ready to explode when the Bank of England lights the fuse but the latest set of inflation data may mean it keeps the match in its box for now.
“Despite inflation coming in higher than expected, the base rate is still likely to be cut in 2024 and that will be music to the ears of homeowners, landlords and tenants alike.”
Ben Perks, managing director at Orchard Financial Advisers:
“Between March and May, the property market usually springs into action, but this year it has been much quieter.
“First-time buyers are stepping out of the shadows and enquiries have increased but it is clear that many people are holding off to see what happens with mortgage rates.
“As borrowers adapt and accept the ‘new norm’ of higher interest rates, activity should increase. But we desperately need a catalyst to inject some confidence and excitement into the industry, and a base rate reduction would do this.
“Sadly, the latest inflation data means we may have to wait a little longer for that first cut.
“Being a landlord has become very unattractive, as interest rates have pushed mortgage payments up and they are passing these costs onto tenants. We’re certainly not seeing any let-up in rents on the ground.”
Kate Allen, owner at Finest Stays:
“Unlike Katniss in The Hunger Games, the odds are not in my favour.
“As a London HMO landlord, my buy-to-let mortgage is up for renegotiation.
“With harsh interest rates, especially for an HMO, it’s no longer profitable. Time to sell up.”
Dariusz Karpowicz, director at Albion Financial Advice:
“There is definitely more activity among first-time buyers, which may be contributing to the uptick in annual house price growth.
“Rates are high, but people are still looking to buy and are well aware of the higher mortgage interest rate environment we’re now in.
“Unfortunately, the supply of property is not improving, as there is little interest in building enough homes each year or making it easier to build more.
“Landlords, particularly those who don’t own their properties through a limited company, continue to sell off their properties.
“This is resulting in massive pressure on tenants as rents keep rising due to the shrinking supply of rental properties.
“The pressure on tenants is unlikely to ease soon, given these dynamics. With that in mind, this data seems slightly out of sync with what’s happening in the market.”
Craig Fish, director at Lodestone Mortgages & Protection:
“We are still witnessing many incidents of down valuations where asking prices are totally unrealistic.
“We are seeing lots of enquiries from those wishing to purchase but until there is more confidence around future mortgage pricing, these enquiries are unlikely to convert into written business.
“The buy-to-let market is virtually non-existent at present, and whilst we are not witnessing a mass exodus, we are also not seeing much new investment.”
Mark Hosker, mortgage adviser at Cyborg Finance:
“In the rental market, novice landlords are selling due to Conservative legislation changes and increased mortgage rates.
“This, combined with fewer new landlords entering the market, is causing rental supply to dwindle.
“Unfortunately, this translates to more pressure on tenants as competition for available properties increases.
“Tenants may find it difficult, but it’s good news for first-time buyers in regions where there is a lot of rental supply.
“However, first-time buyers still face challenges in the market, as affordability remains a key hurdle despite schemes for those with small deposits.
“Homeowners may decide to move homes as their fixed-rate deals end. Previously, many held onto properties to benefit from attractive mortgage rates.
“With these rates now rising, there’s a growing inclination to pay higher rates on homes that better meet their needs rather than sticking with a home that doesn’t.”
Jonathan Gordon, director of Wealth Management at IP Global:
“Once again the UK residential property market has defied expectation.
“While borrowing rates have already stayed higher for longer the prospect of lower interest rates and a squeeze on supply continues to support the sales market.
“Average rents across the UK are now 8.5% higher than 2023 and only going one way. Conservative estimates suggest an extra 50-100,000 rental units are required across the UK to address the problem.
“However, following the additional stamp duty and the inability for individuals to offset their interest costs against income, the amount of landlords within the market continues to fall, exacerbating the problem.
“To counter this, there has been mention of rent controls in parts of the UK in the run up to the next election.
“While some could consider this politically popular, the evidence suggests otherwise.
“For example Edinburgh, (after rent controls were introduced in 2023), has had rent rises over the last 12 months of 12%, amongst the highest in UK.”
Scott Gallacher, director at Rowley Turton:
“Several clients in the construction industry report that home builders are increasingly adopting a ‘build to order’ model rather than building speculatively for sale.
“This shift is detrimental to my construction clients, who are experiencing reduced work volumes, and it will further restrict the supply of new homes.
“On the buy-to-let side, many landlords are selling their rental properties due to rising mortgage costs and other factors.
“Depending on who buys these properties, this could reduce the supply of rental homes and return them to the owner-occupier market.
“Overall, rising mortgage costs are putting significant pressure on landlords. Many who have been hesitant to increase rents for long-standing, reliable tenants are now being forced to do so to cover their increased expenses.”
