UK house prices show signs of recovery after slowdown

The UK’s housing market appears to be stabilising after a period of decline, with average house prices edging upwards for the second month in a row, the Office for National Statistics (ONS) reports.

It says that house prices rose 1.1% in the 12 months to April, reaching an average of £281,000.

This follows a 0.9% increase reported in March and marks a positive shift after eight consecutive months of annual price falls.

The report also highlights regional variations and while England and Wales saw modest rises of 0.6% and 0.4% respectively, Scotland saw prices grow by 4.5%.

Prices in Northern Ireland continue an upward trend with a 4% increase.

Positive outlook for house prices in the UK

The Royal Institution of Chartered Surveyors (RICS) adds to the positive outlook for house prices in the UK as it reports that buyer demand is stabilising across the UK.

Its survey also indicates an increase in new property listings, suggesting a more balanced market.

The Bank of England is predicting that house prices will remain stable or grow modestly in the coming months.

This is probably down to the recent reduction in mortgage rates, which is boosting buyer activity.

Also, HMRC data reveals a rise in property transactions with a 9.8% year-on-year increase in residential property transactions worth £40,000 or more in April, compared to the same month last year.

Industry reaction to house prices picking up

• Nathan Emerson, the chief executive of Propertymark, said: “Since the start of the year, we have seen healthy progress within the housing sector, with consumers finding a sensible balance of affordability and market confidence. With the tide now decisively turning regarding inflation, the attention is now firmly focused on when the Bank of England feels confident enough to start lowering the base rate. Once this journey starts to happen and when the political landscape simmers down following the general election, we should see a stable market for the foreseeable future.”
• Emma Cox, the managing director of real estate at Shawbrook, said: “April house price data confirms the positive trend we’ve observed throughout 2024. This sustained growth is encouraging, indicating a cautious return of confidence in the market, despite the absence of an anticipated near-term base rate cut. Professional landlords will be hoping for some stability post-election both economically and politically to support them in their portfolio management. A consistent economy brings consistent property valuations which in turn helps landlords plan for growth and bring that much needed supply of rental properties to the market.”
• Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “As expected, inflation has hit the 2% target, giving the Bank of England a further nudge to start reducing interest rates. If the Bank wants to be bold, that first reduction would come this month but more likely it will be August. There is a sense that some buyers and sellers are waiting for the first-rate reduction before taking action, so a cut this summer could really give the housing market a boost.”
• Jean Jameson, the chief sales officer at Foxtons, said: “May has been a strong month for activity, as confidence in the sales market continues to grow. Viewings were up 12% and new properties coming to market were up 11% respectively, with little impact from the announcement of the General Election towards the end of the month. The mortgage market seems to have settled and along with inflation levels coming down, there seems to be a new confidence in the sales market.”
• Matt Thompson, head of sales at Chestertons, said: “The majority of buyers in April would have secured a fixed mortgage ahead of rate hikes which means they would have been largely unaffected by rising mortgage rates. Other house hunters decided to rethink their budget or widen their search radius to accommodate rate increases rather than giving up on their search completely – particularly as the spring market has seen an increase in the number of available properties which has given buyers a larger pool of homes to choose from.”
• Tomer Aboody, a director of property lender MT Finance, said: “Whereas we haven’t as yet hit the dizzy heights of the post-Covid era where houses were flying off the shelves due to stamp duty reforms, families needing more space and rock-bottom interest rates, we are seeing steady growth in values which illustrates confidence has returned to the market. Volumes are significantly lower than last year, but again, on a positive upwards cycle. There’s never been a better time to reform stamp duty but sadly a likely incoming Labour government doesn’t appear supportive of this.”
• Iain McKenzie, the chief executive of The Guild of Property Professionals, said: “Modest but healthy levels of growth seem to be the picture of house prices currently, bringing some much-needed stability to the property market. This period of calm is an opportunity for both buyers and sellers alike. Sellers can benefit from continued strong buyer demand, while a more balanced market may offer better value for buyers, particularly those looking to own their first home. There are clear differences on a regional basis, with areas like the North West seeing strong growth of nearly 4%, compared with London’s decrease by a similar amount. The next government needs to work together with industry stakeholders to address the ongoing challenges facing the industry. Policies that increase housing supply, enhance affordability, and promote transparency will benefit buyers, sellers and estate agents.”

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