UK house prices rise despite high mortgage rates
UK house prices increased by 0.1% on a monthly basis in April, according to Halifax's monthly House Price Index.
A typical UK home cost £288,949, compared with £288,781 in March, when prices dropped by 0.9%.
Annually, property prices grew by 1.1%, compared with a 0.4% rise the previous month.
"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," Amanda Bryden, Halifax's head of mortgages, said.
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"While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability," she added.
By region, Northern Ireland remained 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 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 costing £218,775. Meanwhile Scottish house prices rose 1.5% year-on-year to stand at £204,579.
The North West continued to see the strongest growth in England, up by 3.3% on an annual basis to £231,599.
Annual price falls were predominately found in the south of England, as the "North-South" divide across English regions was 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%.
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“While a return of house price growth is positive, the market remains volatile as challenges persist for buyers and those looking to refinance. Interest rates have been on pause at a 16-year high of 5.25% since August last year, a factor causing considerable uncertainty in the mortgage market," Alice Haine, personal finance analyst at Bestinvest, said.
While mortgage rates eased dramatically at the start of the year as hopes of imminent rate cuts soared, they have undergone a reprice in recent weeks amid market revisions over the magnitude and timing of rate cuts.
“Buyers may be returning to the market, but this is largely driven by people purchasing smaller, more affordable homes over larger, more expensive properties. The race for space has firmly gone into reverse gear with annual price growth for flats and terraced houses now accelerating at a faster pace than detached and semi-detached homes as high living costs and high interest rates take their toll on what people can realistically purchase," she added.
Estate agent Savills said it expects house prices to rise by more than £60,000 over the next five years as Britain’s mortgage crunch eases.
The estate agent significantly upgraded its five-year forecasts for the housing market, citing an “improved economic outlook”.
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Kate Steere, property expert at personal finance comparison site finder.com, said: "A lot of uncertainty still surrounds the UK housing market, but today’s figures, alongside the fact that mortgage approvals have been on the rise, shows that buyer demand could be strengthening.
The Bank of England is widely predicted to cut rates in the coming months, with half of experts believing rates will be cut at the Bank’s meeting on 20 June. As a result, buyers who have so far held off, are beginning to return to the market. However, affordability issues remain, with several big lenders increasing their rates over the last week. Therefore, it’s unlikely that we’ll see UK house prices sprint away in 2024, but there are encouraging signs of recovery. "
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