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House Prices Experience Modest Growth Despite Economic Pressures and Regional Disparities

UK house prices

The latest release of the Halifax House Price Index reveals a modest uptick in UK house prices, marking a 0.1% increase in April following a dip in March. This brings the year-over-year growth to 1.1%, up from 0.4% in the previous month, with the average house price now standing at £288,949. The data highlights significant regional variations, with the North West experiencing the strongest growth at 3.3%, in contrast to a 1.1% decline in Eastern England.

Regional Disparities Highlight Market Imbalance
Sarah Coles of Hargreaves Lansdown comments on the situation, stating, “It might look like house prices have stabilised, staying relatively flat over the first four months of 2024, but look a little closer at the annual figures and the market is wonky—with the north/south divide seeing prices climb in the north and drop steadily in the south.”

Economic Pressures and Mortgage Rates
The persistence of high mortgage rates is a significant factor influencing the market dynamics. “Mortgage rates remain so stubbornly high… At the end of April, the average 2-year fixed rate mortgage had crept up to 5.87% – from 5.8% at the end of March,” Coles explains. This increase, albeit slight, adds pressure to buyers, especially in the south where higher property prices make larger mortgages necessary, dampening demand and causing prices to level off or fall.

Market Outlook and Strategic Considerations
Looking ahead, there is a cautious optimism that interest rates might decrease in the latter half of the year, potentially revitalizing the market. Nathan Emerson, CEO at Propertymark, notes an uptick in confidence among buyers and sellers: “It is encouraging to see that house prices are increasing, giving sellers the confidence they need to put their house onto the market during what will be a busy time for the housing market.”

Conversely, Daniel Austin from ASK Partners discusses the broader implications for the property sector, including commercial real estate: “The property sector is in recovery mode… In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.” He also anticipates that despite potential government interventions like stamp duty holidays, the balance between boosting supply and maintaining market stability will remain a challenge.

While there are signs of recovery and optimism in the UK housing market, the blend of economic pressures and strategic market responses presents a complex scenario for buyers, sellers, and developers moving forward.