House Price Data

According to Nationwide, house prices rose by 1.6% in March year-on-year, the fastest increase since December 2022. However, this was below analysts’ expectations, and the month-on-month figure saw property prices decline by 0.2% swinging from a gain of 0.7% in February and defying forecasts for another monthly increase. Nationwide said the market remains “relatively subdued by historic standards”.

Expectations for Bank of England rate cuts combined with competition among mortgage brokers and weak demand resulted in lending rate reductions at the start of the year. This provided some support to house prices after the pain inflicted on the market over the last two years on the back of the central bank’s aggressive stream of rate hikes. However, mortgage rates started to pick up again in February and March as it became clear that the central bank was in no rush to start cutting interest rates, which are still stuck at more than 15-year highs. This has pushed individuals and families away from the sales market towards the lettings market instead where rental costs have been rising at a record pace.

Once the Bank of England begins cutting interest rates, and borrowing becomes more affordable, there could be a pick-up in housing market activity once again, possibly in the latter half of 2024 or in 2025.

 

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