Industry reaction: UK House prices rise for the first time in a year

House prices are just 3% below the all-time highs recorded in the summer of 2022 after they rose for first time in over a year during February, data from Nationwide has  revealed.

UK house prices rose 0.7% month on month during February taking the annual rate of house price growth to 1.2% from -0.2% the previous month.

UPTICK

Robert Gardner, Nationwide‘s Chief Economist, says: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market.

“Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.”

But he warns: “Near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates.  After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up.

“Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.”

WELCOMED

Nevertheless agents welcomed the news.

Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “We’re expecting to see the house market back on the march this year, and a return to positive annual price growth is another good sign.

“Growth will be welcomed by sellers that have been cautious to stick out the ‘for sale’ signs since prices began to ease.”

And he adds: “This resurgence in activity is a promising sign that should bring more buyers out of hiding and encourage growth in the sector. We are already seeing this play out, with HMRC also recording an uptick in sales at the start of the year.”

CONFIDENT

Matt Thompson, Chestertons’ Head of Sales, says: “Buyers have become increasingly confident since the end of last year when interest rates were held at 5.25% and mortgage rates started to come down.

“This sentiment carried through to January and February 2024. Meanwhile, sellers have also been feeling more optimistic about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale.”

Tom Bill, Head of UK residential research at Knight Frank, adds: “Buyers feel confident that the only way for the base rate is down, which has seen demand and house prices pick up in recent months.

“The upwards pressure on mortgage rates in recent weeks shows sellers the importance of getting the asking price right.

“Banks are keen to lend and should eventually lower rates this year as inflation comes under control, which we believe will sustain positive annual growth in 2024 and see UK house prices increase by 3%.”

UPWARDS

Amy Reynolds, Head of Sales at Richmond-based Antony Roberts, adds: “In line with the bustling activity we are seeing on the ground, Nationwide’s latest house price index underscores the upwards trajectory in property prices.

“It is an opportune time for buyers and sellers to seize the moment. We’ve seen an uptick in applicants with sizeable budgets seeking to upsize to their forever homes, as well as first-time buyers and second steppers wanting flats with outside space.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In our offices, more valuations, listings and viewings combined with fewer fall-throughs than this time last year are feeding through to agreed sales, mortgage approvals and exchanges.”

But he cautions: “While Nationwide reports another rise in prices, the market does remain price sensitive. Only competitively-priced properties are attracting attention. Sellers must price realistically or offers won’t be forthcoming and market improvement may not be sustained.”

And Nathan Emerson, Chief Executive of Propertymark, says: “The housing market always reacts to changing economic trends, so it is encouraging to witness many homeowners seeing both a month on month and year on year uplift on the price of their homes.

“This should help provide people with the confidence to potentially sell where they may have been holding back. The UK Government need to build on this as a chance to prove that the economy is heading in the right direction.”

MORTGAGE BROKERS

Mortgage brokers welcomed the news too.

Mark Harris, Chief Executive of SPF Private Clients, says: “With a growing feeling that base rate has peaked, and the next move in rates will be downwards, this is supporting buyer and seller confidence and boosting activity in the market.

“Mortgage rates are more attractively-priced than they were several months ago, even if the ‘best buy’ deals have been pulled recently.

“There will be ups and downs in mortgage pricing in the weeks and months ahead but there is a growing feeling of optimism that the situation is improving, which will be welcomed by hard-pressed borrowers.”

And Riz Malik, Founder & Director at Southend-on-Sea-based R3 Mortgages, told Newspage: “The UK housing market is poised in the starting blocks waiting for the starter pistol.

“This could either be an announcement in the upcoming Budget or the first cut in the base rate.

“That first cut in the base rate, when it comes, will see the property market spring out of the blocks.”