In March, the UK witnessed a notable uptick in house prices, with a quarterly growth of 2.0%. However, this surge was accompanied by a slowdown in annual growth, which decelerated to 0.3% compared to February’s figure of 1.6%. This nuanced fluctuation suggests a mixed trajectory in the housing market, reflecting the complex interplay of various economic factors influencing property values.
On a monthly basis, the data reveals a contrasting picture, with the price of a UK property declining by 1.0% or £2,908 in cash terms. This dip underscores the inherent volatility within the housing market, where short-term fluctuations can diverge from broader trends. Despite this marginal decline, the average property price still stands at £288,430, indicating resilience amidst fluctuating market conditions.
Amidst these fluctuations, Northern Ireland emerges as a standout performer, boasting a robust annual growth rate of 4.3% in house prices. This significant increase highlights the region’s resilience and attractiveness to property investors. The average property price in Northern Ireland now sits at £194,743, marking a substantial £7,972 increase compared to the previous year. This steady growth trajectory positions Northern Ireland as a promising market for both buyers and sellers alike.
In Wales, the pace of annual property price growth decelerated to 1.9% in March, marking a notable slowdown from the 3.9% recorded in February. As a result, the average home now commands a price tag of £219,213, reflecting the evolving dynamics within the Welsh property market. Meanwhile, across the border in Scotland, house prices experienced a more robust growth trajectory, rising by 2.1% year-on-year to reach an average of £204,835, indicating a contrasting trend compared to Wales.
Turning to England, regional disparities are evident, showcasing a diverse landscape of property market performances. In the North West, property prices saw the strongest surge, with a notable 3.7% annual growth, pushing the average home price to £232,315. This growth underscores the buoyancy of the housing market in the region, driven by various factors such as affordability and economic dynamics. Conversely, Eastern England witnessed a downturn, recording the largest decline of 0.9% in property prices. Homes in this region now fetch an average of £330,627, reflecting a drop of £2,878 over the past year.
Despite its status as the nation’s capital, London’s property market showcases a nuanced picture. While London continues to boast the highest average house price in the UK, standing at £539,917, the rate of price appreciation has been relatively modest. Over the last year, prices in the capital increased by a marginal 0.4%, indicating a stabilizing trend compared to previous years. This nuanced performance reflects the intricate interplay of factors influencing London’s property market dynamics, including economic conditions, housing supply, and demand trends.
The latest index from Halifax highlights a notable monthly decline in house prices, marking a shift following five consecutive months of growth. Kim Kinnaird, Head of Mortgages at Halifax, attributes this decline to ongoing market adjustments since the sharp rise in interest rates in 2022. Despite these fluctuations, house prices have displayed unexpected resilience, even in the face of significant increases in borrowing costs.
However, affordability remains a persistent challenge for prospective buyers, compounded by the continuous rise in property prices. Existing homeowners on lower fixed-term deals have yet to experience the full impact of higher interest rates, further contributing to the market’s adjustment phase. Consequently, sellers are likely adjusting their property prices to navigate these evolving market conditions, reflecting the ongoing recalibration within the housing sector.
“Financial markets have also become less optimistic about the degree and timing of Base Rate cuts, as core inflation proves stickier than generally expected. This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year.
“The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high interest rates. Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre- pandemic levels.
“Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market. And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work. However, the housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year.”
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