"House prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects."
- Robert Gardner - Nationwide
The latest Nationwide data has revealed that average UK house prices saw a 0.7% month-on-month rise in February - the first time since January 2023 that the annual rate of change has returned to positive territory.
On an annual basis, prices are up 1.2% with the price of a typical home in the UK now standing at £260,420 (not seasonally adjusted).
Robert Gardner, Nationwide's Chief Economist, said: “UK house prices rose by 0.7% in February, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to 1.2% in February, from -0.2% the previous month. House prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.
Signs of easing in affordability pressures
“The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.
Swap rates Feb24
“Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates. After falling sharply in late December, swap rates, which underpin fixed-rate mortgage pricing, have drifted back up.
“Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.
“While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”
Tom Bill, Head of UK residential research at Knight Frank commented: “Buyers feel confident that the only way for the base rate is down, which has seen demand and house prices pick up in recent months.
"However, the upward pressure on mortgage rates in recent weeks shows sellers the importance of getting the asking price right. Banks are keen to lend and should eventually lower rates this year as inflation comes under control, which we believe will sustain positive annual growth in 2024 and see UK house prices increase by 3%.”
Nathan Emerson, CEO of Propertymark, comments: “The housing market always reacts to changing economic trends, so it is encouraging to witness many homeowners seeing both a month-on-month and year-on-year uplift on the price of their homes. This should help provide people with the confidence to potentially sell where they may have been holding back.
"The UK Government need to build on this as a chance to prove that the economy is heading in the right direction.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “In line with the bustling activity we are seeing on the ground, Nationwide’s latest house price index underscores the upward trajectory in property prices.
“It is an opportune time for buyers and sellers to seize the moment. The sales market continues to pick up momentum after a relatively quiet 2023 with a surge of committed buyers and a strong pipeline of serious applicants boding well for a busier spring market.
"Notably, we’ve seen an uptick in applicants with sizeable budgets seeking to upsize to their forever homes, as well as first-time buyers and second steppers wanting flats with outside space.
“Overall market strength and stability is being supported by better mortgage rates and persistent supply/demand imbalances, which is particularly evident across London.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi, says: “The volume of chatter about house prices having ‘hit the bottom’ has been getting louder. Nationwide’s latest numbers verify this and, as house prices begin to rise again, many homeowners will breathe a sigh of relief.
“Demographic shifts are driving growing demand for housing, including net immigration, shrinking household sizes and an ageing population. This growth in demand, combined with constrained supply, inevitably leads to pricing pressure, which is a mixed blessing depending on which side of the homeowner fence you sit on.
“The challenge and opportunity for investors is to maintain a level head in the context of market change, including price rises. It’s about remaining focused on what will drive long-term value in the future: the ability to meet the needs of the current and next generations, including quality, affordable homes to aspiring homeowners and for rent.”
