Halifax has published its house price index for March, which witnessed a 1% drop in average house prices, following a sustained five-month period of increases. This dip has brought the average price down to £288,430, marking a £2,900 decrease within a single month, despite a modest year-on-year growth of 0.3%.
Mortgage Rates and Market Dynamics
Sarah Coles, head of personal finance at Hargreaves Lansdown, attributes this decline to the recent mortgage rate hikes. “Mortgage rate rises have finally taken a toll on the housing market, and prices fell 1% in March,” she notes. The cumulative effect of gradual increases has pushed the average 2-year fixed mortgage rate from 5.56% at the end of January to 5.81% by March’s end, impacting the market’s vitality. Coles also highlights the broader economic sentiment’s role in this downturn, with consumer reticence extending from retail to real estate investments amid ongoing financial uncertainty.
The Property Market’s Outlook
Despite the current setback, there’s optimism that the situation may not herald a prolonged downturn. Coles suggests potential relief with anticipated rate cuts, which could invigorate the market once more. She also advises prospective buyers to leverage the rising savings rates, particularly through online banks and savings platforms, to maximize their deposit’s growth during this waiting period.
Nathan Emerson, CEO at Propertymark, adds that the spring season traditionally energises the housing market. He anticipates a resurgence in activity, buoyed by adjusted buyer and seller expectations to the new economic landscape. Emerson also holds a hopeful view on interest rates, aligning with a potential easing of inflation to pre-pandemic levels.
Foxtons CEO, Guy Gittins, echoes this sentiment, reporting a noticeable upturn in buyer activity and expressing confidence in the market’s continued recovery, spurred by expectations of falling interest rates.
Jason Harris-Cohen from Open Property Group emphasises the importance of patience for sellers in this fluctuating market, advising a focus on buyers ready to proceed rather than those offering the highest price to avoid transaction fall-throughs.
Ruth Beeton, Co-Founder of Home Sale Pack, warns of potential operational strains on the property industry due to increased demand. She urges buyers and sellers to act swiftly to avoid delays reminiscent of the pandemic-induced market boom and the subsequent backlog, underscoring the need for system improvements to prevent repeat issues.
This period of adjustment in the property market underscores the importance of staying informed and prepared for both landlords and potential homebuyers. With the landscape evolving, strategic financial planning and awareness of market trends can provide crucial advantages in navigating these uncertain times.
