"The principal factor behind this improved picture has been an easing of mortgage rates"
Halifax figures released this morning reveal that average house price increased by +0.8% in March following a +1.2% rise in February, with the price of a typical home in the UK now costing £287,880 compared to £285,660 the previous month.
Nations and regions
According to the data, the average house price edged up in all the UK nations and regions during March. However, with the exceptions of Greater London and the North East, all areas of the country experienced a slowdown in the rate of annual house price inflation.
Northern Ireland continues to report the strongest annual growth in house prices of +4.9% (average house price of £186,459), followed by the West Midlands (+3.8%, average property price of £248,308).
In Wales, the rate of annual property price inflation has slowed to +1.0% (average house price of £213,959). Similarly in Scotland, the annual rate of growth fell to +2.3% (average property price of £199,853).
Average house prices in London are up very slightly on this time last year (+0.1%) with the typical property now costing £537,250
Kim Kinnaird, Director, Halifax Mortgages, comments: “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.
“On an annual basis, house prices were +1.6% higher than a year ago, slowing from +2.1% in February. This is the weakest rate of annual growth in nearly three-and-a-half years (October 2019), having fallen markedly since June 2022’s peak of +12.5%.
“However, overall these latest figures continue to suggest relative stability in the housing market at the start of 2023 and align with many other recent industry surveys and data. This has been characterised by a partial recovery in activity and transactions, especially when compared to the significant drops seen at the end of last year, with the latest Bank of England data showing mortgage approvals rising for the first time in six months.
“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 five-year fixed rate deal (75% LTV) is down by more than 100 basis points over the last few months.
“It’s also important to recognise that the labour market, a key indicator for house prices, remains strong, with unemployment at a historical low of 3.7%, and pay growth continues to look robust.
“Predicting exactly where house prices go next is more difficult. While the increased cost of living continues to put significant pressure on personal finances, the likely drop in energy prices – and inflation more generally – in the coming months should offer a little more headroom in household budgets.
“While the path for interest rates is uncertain, mortgage costs are unlikely to get significantly cheaper in the short-term and the performance of the housing market will continue to reflect these new norms of higher borrowing costs and lower demand. Therefore, we still expect to see a continued slowdown through this year.”
Nathan Emerson, CEO of Propertymark, said: “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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "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 upon 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, says: “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.”
