UK HPI: prices pause in March

UK HPI: prices pause in March

Latest ONS figures show that the average house price remained at a record high of £278,000 in March, up £24,000 in a year.

Average house prices were up 9.8% in the year, down from 11.3% in February, and show a reduction since peaking at 13.3% in June last year. Detached house prices were up 13.7%, while semi-detached houses were up 11.1%, and flats were up 4%. New build prices increased by 19.9%.

Simon McCulloch, Chief Commercial & Growth Officer at Smoove commented:

“House prices continue to rise at a significant year-on-year pace of 9.8% in March. More properties are coming onto market and selling faster than ever, and at record-breaking prices, yet house prices continue to rise. Even for first-time buyers, our data shows new instructions are up 54% from 2020. However, the rising cost of living, lenders pulling competitive rates, and base rate rises mean many buyers are becoming limited in what they can afford. Ultimately, there’s a clear dichotomy between rising prices, greater supply, and constrained affordability and we’ll see within the coming months if economic pressures test the market’s current trajectory.”

Andy Sommerville, Director at Search Acumen, commented:

“Since the interest rate rise in early May, conveyancing firms are operating at a frenetic rate to help buyers get over the line whilst their mortgage in principle still stands. The lending market is moving faster than Land Registry based valuations, making today’s transactions incredibly time sensitive on both sides of a chain. This underscores a historic problem with our transaction process; not only is it incredibly slow, but it has the very real ability to make even a timely transaction collapse. In February we saw homebuyers battle with 135-day delays, where the average time between instruction and completion jumped 48% since 2020. The digitalisation of the industry as a whole will help the market respond to future peaks and troughs, ensuring our housing market remains robust in the long term.”

Nathan Emerson, CEO of Propertymark, said:

“The year-on-year increase shows there is still plenty of momentum within the housing market, however we are now seeing some signs of things starting to cool.

But we keep coming back to the issue of low supply being the main driver of rising prices. Our member agents are telling us that it’s still an issue and that the number of people looking to buy remains far higher than the number of properties they have listed. This, coupled with incredibly low borrowing rates, is likely to maintain prices in the short to medium term.”

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown commented:

“Average annual price rises have bounced in and out of double digits for almost a year now, so a single monthly drop isn’t the canary in the coalmine. It’s not the first monthly pause in the relentless rise of average prices either.

There are still plenty of signs of strength in the market that have come through since March, with sales remaining brisk, mortgage approvals running above pre-pandemic levels, and the number of buyers still growing – and continuing to dramatically outnumber sellers. Zoopla figures out yesterday also show rents rising an astonishing 11% in a year, helping to fuel demand from first-time buyers determined to escape the rent trap.

However, it’s only a matter of time before we see house prices slow on a more sustained basis. The latest RICS report showed that the number of buyers continued to rise, but that they were getting a bit more cautious. Even if they’re still keen to buy, mortgage companies are increasing rates and boosting the assumed costs in their affordability calculations, so there’s going to come a time when it gets harder for people to get a loan.”

 

Annie Simmons

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