In May, house prices saw a notable increase, rising by 0.4% in a month and now standing 1.3% higher than a year ago. The latest data from Nationwide indicates a positive shift in consumer confidence, buoyed by easing inflation and rising wages, driving renewed activity in the property market.
House prices and consumer confidence on the rise
Sarah Coles, head of personal finance at Hargreaves Lansdown, observed, “Spring has come to the property market, with house prices skipping up to an average of £264,249 – the highest since October 2022. Consumer confidence has overcome the pressure of higher prices and mortgage rates, keeping buyers and sellers in the game.” Despite mortgage rates creeping upwards, with the average two-year fixed rate mortgage rising from 5.56% in January to 5.92% by the end of May, buyers remain active, driven by positive personal financial outlooks.
Impact of rising house prices and election
Coles further explained that while higher house prices and mortgage rates present challenges, improved financial confidence among consumers is playing a crucial role. “The easing of inflation, coupled with robust wage growth and relatively low unemployment, mean people are feeling more secure,” she noted. The upcoming general election is not expected to disrupt the market significantly, although a glut of properties on the market could limit further price increases. Zoopla reported the highest number of homes for sale in eight years, giving buyers leverage to negotiate better deals.
Nathan Emerson, CEO of Propertymark, commented on the Nationwide House Price Index for May 2024, saying, “The housing sector has seen a strong start to the year and it’s positive to see further momentum. We are conscious there may be a potential slow down across the summer as a knock-on effect following the general election, but with inflation firmly on its journey downward and with scope for interest rate cuts, we may soon see a much welcome influx of highly competitive deals from lenders hit the marketplace.”
Market activity and future outlook
Ruth Beeton, Co-Founder of Home Sale Pack, highlighted the surge in market activity since the start of the year. “Market activity has accelerated significantly since the start of the year and a surge in buyer activity has helped to revitalise the rate of house price growth being seen on both a monthly and annual basis,” she said. Beeton also pointed out that increased activity may extend the time needed to complete sales, urging those considering a move in 2024 to prepare early.
Verona Frankish, CEO of Yopa, echoed the positive sentiment, stating, “Despite a prolonged period of higher interest rates we’re yet to have seen any notable decline in property values and it seems as though the tide has now well and truly turned, as the market starts to build momentum following a resurgence in market activity so far this year.”
Expert insights on market resilience
Michelle Stevens, a mortgage expert at finder.com, acknowledged the lingering uncertainty in the UK housing market but highlighted strengthening buyer demand. “The Bank of England is widely predicted to cut rates in the coming months, and as a result buyers who have so far held off are beginning to return to the market,” she said. Stevens cautioned that while there are signs of recovery, affordability issues persist for many households, which could temper the pace of house price growth in 2024.
A cautiously optimistic outlook
The property market shows encouraging signs of recovery with rising house prices and growing consumer confidence. However, affordability challenges and the potential impacts of the general election and mortgage rate fluctuations will continue to influence the market dynamics. As the year progresses, landlords and potential buyers will need to stay informed and prepared to navigate the evolving landscape of the UK property market.
Nationwide has released its house price index for May: Modest rebound in house price growth in May as market shows resilience
