House Prices: ONS Sees Prices Up 1.8% In Year To March As Inflation Falls Further To 2.3%
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22 May: All Eyes On Bank Of England June Rate Decision
- House prices up 1.8% in year to March
- Month-on-month values up 0.7%
- Average house price at £283,000
- Inflation approaches Bank’s 2% target
Average UK house prices increased by 1.8% in the year to March 2024, according to figures out today from the Office for National Statistics (ONS). This is up from the revised 0.2% fall recorded in the year to February, writes Jo Thornhill.
The ONS, which uses data from property sales recorded by HM Land Registry, shows house price values rose by 0.7% between February and March 2024. The average UK property is now worth £283,000 – that’s £5,000 higher than a year ago.
Regionally there are big differences in house price inflation. In the 12 months to March, average house prices rose by:
- 1% in England (average property sale value is now £299,000)
- 1.3% in Wales (£214,000)
- 6.7% in Scotland (£192,000)
- 4% in the year to quarter one (January to March 2024) in Northern Ireland (£178,000).
In England, Yorkshire and the Humber region saw the biggest annual price rises at 5% in the year to March. The average home in the region is now just under £210,000.
London was the English region with the lowest annual inflation, with prices decreasing by 3.4% in the 12 months to March 2024. Prices in the capital remain the highest at just under £500,000, on average.
Matt Thompson at London estate agent Chestertons said: “In March, the property market witnessed steady demand from buyers, although some house hunters decided to pause their search in the hope for major incentives to be announced in the Budget.
“As this wasn’t the case, the majority of these buyers have since resumed their property search. March concluded the first quarter of the year with a busy property market, particularly in the capital, where demand continues to outstrip supply.”
Jeremy Leaf, a London estate agent, said: “This relatively modest acceleration in house-price increases, which includes mortgaged and cash sales, though a little dated, shows how even anticipation of today’s drop in inflation is giving another boost to housing market activity.”
The ONS reported this morning that inflation for April stood at 2.3%, significantly down on March’s 3.2%. The steep drop is engendering expectations of a cut in the Bank of England Bank Rate, either in June or August.
Leaf added: “Confidence is such an important factor when it comes to home-buying decisions and there is no doubt that the cost of living too plays a huge part when buyers are deciding whether to take on further debt.
“On the ground, expectations are rising that mortgage rates are continuing their journey south, even if they are not moving as far or as soon as many had expected.”
20 May: Asking Prices Surge As Market Expects Rate Cut
- Asking prices rise 0.8% in May
- Prices up 0.6% year on year
- Average house price at record £375,131
The average asking price of newly-marketed properties rose by 0.8% in May to reach a record £375,131, according to online property site Rightmove, writes Jo Thornhill.
Sales were up 17% in the four months from January to April, compared to the same period in 2023, most likely driven by pent-up buyer demand built up last year when mortgage rates were still rising.
But Rightmove says the market remains price-sensitive and recovery is muted, with average asking prices only a marginal 0.6% higher than a year ago.
The most expensive properties, in the so-called top-of-the-ladder sector, are driving price growth, according to Rightmove figures, with average prices up by 1.3% compared with last year. The average home in this category is now worth £693,791.
In contrast, first-time buyer properties and second-stepper homes have seen annual rises of just 0.7% and 0.5% respectively. The average first-time buyer property asking price is now £227,110, while for second-stepper homes it is £342,501.
It is taking an average of 154 days from a property sale being agreed to legal completion, according to Rightmove, which can cause issues for buyers, home movers and estate agents.
In addition, it is taking 62 days on average to find a buyer for a property before the legal process begins, further stretching out the home buying process. Rightmove says more realistic pricing from the outset can cut down on the need for protracted negotiations that extend the time taken to secure a sale.
Although the time taken to find a buyer is now lower than the average time in January, when it was 71 days, it is still much higher than the typical sale time sellers experienced a year ago, when the average time was 55 days.
Regionally, average asking prices have gone up in every area of the UK in May, with the biggest monthly jump seen in the South East of England at 1.4%. Year-on-year prices are down by 0.1% in this region, however, and the average asking price is now £494,300.
Prices are also down annually in the East of England, where average asking prices have fallen by 0.6% year on year. The average asking price here stands at £422,364.
The largest annual increase in asking prices is in the North East of England at 5.8%. Average asking prices in this region are now £190,158.
Tim Bannister, Rightmove’s director of property science, said: “Some predicted that property prices would suffer sharp falls and take a while to recover following the Bank of England increasing the Bank Rate to 5.25%, where it has remained since August 2023. However, the momentum of the spring selling season has exerted enough upward price pressure to reach a new record asking price.
“The top-of-the-ladder sector is still leading the way, while from a regional perspective the North East, with the cheapest average prices in Great Britain, has seen the strongest price growth. However, it’s important to remember that prices overall are still only 0.6% ahead of this time last year.
“The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many home-buyers is still stretched.”
Nathan Emerson, CEO of Propertymark, the trade body for estate agents, said: “Spring heading into summer is traditionally a busy time for the housing market and these latest figures may prove an ideal inspiration for sellers to use this as an opportunity to place their property on the market.”
Propertymark’s says there has been a recent 4% increase in the number of potential buyers registered at each of its member branches.
7 May: Bank Of England Announcement This Thursday
- Prices up 0.1% in April following 0.9% fall in March
- 1.1% average annual increase masks regional variations
- Typical UK home costs £288,949
Average property prices rose by a marginal 0.1% in April, according to the latest data from Halifax. It follows a fall of 0.9% in prices in March.
In the year to April, house prices increased by 1.1%, taking the value of the average home to £288,949.
But while nationally average prices look to be flatlining, regionally there continue to be big differentials in property price performance.
Northern Ireland remains the strongest performing nation or region in the UK, with house prices up by 3.4% on an annual basis in April, though this slowed from an increase of 4.1% in March.
Properties in Northern Ireland now cost an average of £192,502.
In Wales annual price growth slowed to an increase of 1.1% in April, from 1.9% in March, with the average home now costing £218,775, while Scottish house prices rose 1.5% year-on-year to stand at £204,579.
The North West continues to see the strongest growth in England, up by 3.3% in the year to April. Average prices in the region are £231,599.
House price falls are largely happening in the south of England. Properties in Eastern England recorded the biggest decline, with falls of 1.1%, on average, taking the average house price to £329,723, a drop of £3,541 over the last year.
Average price rises in London have been relatively flat over the past year, rising by just 0.1%. The average property in the capital now costs £539,336.
Amanda Bryden, head of mortgages at Halifax, said: “While there is always much scrutiny of monthly house price changes – and a degree of volatility is to be expected given current market conditions – the reality is that average house prices have largely plateaued in the early part of 2024. This reflects a housing market finding its feet in an era of higher interest rates.
“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. Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.
“If, as is still expected, downward moves in Bank Rate come into play later this year, fixed mortgage rates should fall. Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024.”
Gareth Lewis, managing director of property lender MT Finance, says: “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.”
Alice Haine, personal finance analyst at Bestinvest, says: “A rate cut at this week’s Bank of England Monetary Policy Committee meeting appears unlikely, with rate setters likely to stick to the ‘higher for longer’ mantra for now as they wait for concrete evidence that inflationary pressures really have eased.
“The uncertainty does not appear to be deterring buyers, however, who are ploughing into the property market in droves. Net mortgage approvals, an indicator of future borrowing, hit an 18-month high in March, rising for a sixth consecutive month to 61,300. This will offer comfort to buyers and sellers that the market is normalising following a rocky 2023 despite the recent rise in home loan costs.”
The next Bank of England Bank Rate announcement will be made a noon on Thursday 9 May.
1 May: First-Time Buyers Struggling To Raise Deposits
- Prices fall 0.4% in April but rise 0.6% year-on-year
- Average house price now £261,962
House prices across the country fell by 0.4% in April, according to the latest data from Nationwide building society, on the heels of a 0.2% fall recorded in March, writes Jo Thornhill.
Experts say higher mortgage rates and affordability pressures are continuing to bite.
In the year to April, however, average prices are still up by 0.6%, although this is also lower than the 1.6% growth recorded in the year to March.
Robert Gardner, Nationwide’s chief economist, said: “The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.
“House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”
Cost of living pressure and higher mortgage rates appear to be holding back would-be first-time buyers in particular, according to Nationwide. It found that around half (49%) of prospective first-time buyers have delayed their plans over the past year, with the majority citing high house prices as the biggest barrier to getting on the ladder.
Four in 10 (41%) said higher mortgage costs were preventing them from buying.
Two thirds (67%) of first-time buyer respondents to Nationwide’s survey had between £0 and £10,000 saved towards a deposit. But a 10% deposit for a house purchase at the average price of £262,000 would need a deposit of around £26,000.
Nationwide’s Gardner said: “Buying a property in a less expensive area appears to be the most common compromise that prospective buyers will make. Around a third (32%) said they would consider a smaller property than they wanted, while 28% would go for a property that needed work doing.”
Mark Harris, chief executive of broker SPF Private Clients, said: “As mortgage rates edge upwards again on the back of higher swap rates in recent weeks, affordability continues to be an issue for those relying on a mortgage for their property purchase.
“There are likely to be ups and downs in mortgage pricing in the weeks and months ahead but ultimately borrowers will have to get used to paying more for their mortgages as the days of rock-bottom rates have gone.
“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, particularly in London.
“With an interest rate reduction on the horizon, perhaps as early as the summer, this will give the market a welcome boost.”
29 April: Mortgages Up Over 60% In Three Years
- Prices fall 0.2% in year to March
- Agreed sales 12% up year-on-year
- Mortgage payments 61% higher than three years ago
- National average house price £264,500
Higher mortgage rates are continuing to affect the housing market, with average prices down by 0.2% in the year to March, according to online property portal Zoopla, writes Jo Thornhill.
But while prices are broadly static, the site’s data show sales volumes have picked up, with the number of sales agreed 12% higher than this time last year, indicating a renewed appetite among buyers.
The recovery in property sales is also reflected in other figures, such as mortgage approvals for home purchase, which were 32% higher in February 2024 compared to a year ago. Approvals now look to be on course to return to pre-pandemic levels in the coming months (see graph below).
Zoopla says the typical four- to six-months time lag between agreeing a sale subject to contract and moving means sales completion data is yet to register an upturn, but that this is likely to emerge over the summer.
Scotland, Wales and Northern Ireland have seen house price inflation in the year to March. Scotland’s prices have risen by 1.9%, and average prices now stand at £163,300.
Prices in Wales have risen a more modest 0.7% during the same period (average price now £204,300). But prices are up 4.4% in Northern Ireland, where the average property is now worth £168,400.
There is a regional north-south divide in England when it comes to annual house price inflation. Northern regions, including the North West (average price £195,200), North East (£141,200), and Yorkshire and Humber (£186,200), have all recorded marginal annual price increases at 1.1%, 1.3% and 0.8% respectively, for example.
But all regions in southern England have seen annual price falls. The East of England (average price £336,700) and the South East (£385,500) have seen the biggest drops, with falls of 1.7% and 1.6% respectively.
In London, where average house prices stand at £535,700, the highest of any region, prices fell by 0.7% in the year to March.
Zoopla says it expects the current trends in house price inflation, and divergence between the south and the rest of the UK, will continue over the coming months.
Higher mortgage costs continue to bite for first-time buyers and those remortgaging off low fixed rate deals.
According to Zoopla, moving from a sub-2% mortgage rate (taken out in March 2021) to a 4.5% fixed rate today means the annual mortgage repayments for a home purchase have risen by 61%, from £7,100 to £11,400, on average (this assumes a five-year fixed rate mortgage at 70% loan to value, taken over a 30-year term).
Two-thirds of this increase is a result of higher mortgage rates. However, one third is down to the fact that average house prices are 13% higher than in March 2021.
The largest impact has been felt in southern England ,where house prices are higher.
The annual cost of mortgage repayments for an average priced home is more than £5,000 higher per year in 2024 than 2021 across the South West, South East and East of England. This rises to a high of an extra £7,500 in London.
Across other regions and countries of the UK, the increase is lower, ranging between £2,350 and £3,900 a year.
Richard Donnell, executive director, research, at Zoopla, said: “The housing market continues to adjust to higher mortgage rates. Sales volumes are rising and house prices are flat. What the market needs most is continued price stability which will create the environment for continued growth in sales.”
Matt Thompson, head of sales at estate agent Chestertons, said: “The uplift in market activity typically associated with spring was slightly delayed this year but became more evident in the course of April.
“Compared to last month, we have seen an increase in the number of London house hunters which has led to sellers feeling more confident that now is the right time to put their property up for sale. Although buyer and seller numbers are both up, demand continues to outweigh supply which still gives sellers in the capital the upper hand during price negotiations.”
22 April: Sellers Emboldened By Rising Demand
- Average asking prices up 1.1% in April
- Annual increase 1.7% – highest in 12 months
- Average price £372,324
- Top-of-ladder properties see strong start to year
The average asking price of newly-marketed properties rose by 1.1% in April, more than £4,200 in cash terms, according to online…
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