UK House prices held steady in April, after previously rising on a monthly basis, according to the latest house price index from Halifax.
The average property currently costs £288,949 compared to £287,244 at the start of the year. Head of Mortgages at Halifax Amanda Bryden has said that property prices have ‘plateaued in the early part of 2024’.
Since last September interest rates and mortgage approvals have been on the rise which has seen an uptick in offers made on property. According to Halifax’s data, this could indicate a period of market stability.
Halifax boss Bryden, said:
“ Annual growth rose to +1.1%, from +0.4% in March, though this can be attributed to the base effect of weaker price growth around this time last year.
“While there is always much scrutiny of monthly 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. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months.
“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.
“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.”
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 +4.1% in March. Properties in Northern Ireland now cost an average of £192,502.
In Wales annual property price growth slowed to +1.1% in April, from +1.9% in March, with the average home now costing £218,775. Meanwhile 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% on an annual basis to £231,599.
Annual price falls are predominately found in the south of England, as the ‘North-South’ divide across English regions is sustained. Properties in Eastern England recorded the biggest decline of -1.1%, with homes selling for an average of £329,723, a drop of £3,541 over the last year.
London remains the most expensive region in the UK to buy a home, with an average price of £539,336. However prices in the capital have been relatively flat over the last year, up by just +0.1%.
Others have said that the property sector is in ‘recovery mode’ and that the market has shifted importance from ‘yield and debt cost to location and quality’. Well maintained properties in prominent areas command the highest cost, whereas neglected homes struggle to attract tenants and investors.
A RICS survey has uncovered that non-traditional market segments such as aged care facilities, student housing and data centres are yielding the most robust returns.
Commenting on Halifax’s latest data, Daniel Austin, CEO and co-founder at ASK Partners, said:
“The property sector is in recovery mode. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.
“Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.
“For voters, a stamp duty holiday or reprieve may be a welcome sign. For developers, eased planning regulations for brownfield sites and conversions will be popular. However, the government will be faced with a challenge – striking a balance between trying to increase housing supply and therefore affordability by supporting developers and private landlords but appealing to voters who do not want to see greenfield development. The planning system remains hotly political and as a result, landlords and developers are unlikely to see much in their favour.”
