"On the ground, expectations are rising that mortgage rates are continuing on their journey south, even if they are not moving as far or as soon as many had expected."
- Jeremy Leaf, north London estate agent and former RICS residential chairman
Average UK house prices rose by 1.8% year-on-year in March, up from -0.2% in February and the first annual increase seen since June 2023, the latest UK House Price Index from the Land Registry shows.
The average UK house price was £283,000 in March, which is £5,000 higher than 12 months ago. Average house prices in the 12 months to March increased by 1.0% in England, 1.3% in Wales, 6.7% in Scotland, and 4.0% in Northern Ireland.
Of English regions, annual house price inflation was highest in Yorkshire and the Humber, where prices increased by 5.0% in the 12 months to March. London was the English region with the lowest annual inflation, where prices decreased by 3.4%.
Average UK house prices increased by 0.7% between February and March 2024, compared with a decrease of 1.2% during the same period 12 months ago.
Richard Harrison, head of mortgages at Atom Bank, commented: “The increase in house prices reported today brings to an end a long run of falls, and marks a clear turnaround in confidence among buyers. While inflation has fallen by less than expected today, denting hopes of an imminent reduction in base rate, the reality is that cuts are coming and that is bringing would-be purchasers back to the market.
“Asking prices at a record high is a signal of pent-up demand, with the number of sales agreed in the first four months up by 17% on the same period last year. This is borne out by figures from Propertymark showing that estate agents are seeing increases in the number of would-be buyers registering with them. This growing demand has already translated into house price increases reported by the Halifax and Nationwide indices, and it was only a matter of time before this was reflected in ONS reports given the lag in the data.
“It’s important to note that this increased appetite is coming not only from those with spotless credit histories, but also ‘near prime’ borrowers, those who may have had the odd payment blip in their past but who want to push on now with a purchase. Given the current cost of living crisis it’s crucial that lenders look beyond the black and white of a credit score in order to better support such buyers, and offer them a path onto the property ladder.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “This relatively modest acceleration in house-price increases, which includes mortgaged and cash sales, though a little dated shows how even anticipation of today’s drop in inflation is giving another boost to housing market activity.
“Confidence is such an important factor when it comes to home-buying decisions and there is no doubt that the cost of living too plays a huge part when buyers are deciding whether to take on further debt.
“On the ground, expectations are rising that mortgage rates are continuing on their journey south, even if they are not moving as far or as soon as many had expected."
Jonathan Hopper, CEO of Garrington Property Finders, added: “For all the excitement today’s positive figures have generated, they could be a blip rather than a bounceback.
“A statistical steward’s enquiry might even suggest they’re more likely to be a sign of just how many buyers jumped the starter’s gun in January, rather than evidence of a market galloping away at top speed.
“These figures capture many of the sales that were agreed during the brief, but heady, weeks at the start of the year when interest rates fell and demand spiked.
“Since then, interest rates have gone back up, reining in buyer demand just as the number of homes coming onto the market has risen rapidly.
“The net effect has been for prices to cool as buyers are increasingly spoilt for choice. In fact, with supply outstripping demand in several areas, buyers who have their finances in place find themselves in a very strong position – able to negotiate hard on price.
“However with consumer inflation now down to what the Prime Minister has called a ‘normal’ level, a cut in interest rates is surely not far off. And while no-one should expect the cost of borrowing to return to the historic lows seen during Covid, each reduction in interest rates will make it easier for people to buy a home.
“It’s far from business as usual in the property market but today’s exceptional data suggests it’s coming closer.”
