UK house prices show signs of stability after fluctuations

UK house prices edged up slightly in April, following a period of volatility earlier this year, the latest figures from Halifax reveal.

It says prices rose 0.1% after a 0.9% drop in March.

However, annual house price growth remains subdued at 1.1%, although this is an improvement from 0.4% in March.

Halifax says this is down to a weaker performance around the same time last year.

‘Average property now costs £288,949’

Amanda Bryden, the head of mortgages at Halifax, said: “The average property now costs £288,949, compared to £287,244 at the start of the year.

“While there is always much scrutiny of monthly price changes – and a degree of volatility is to be expected given current market conditions – the reality is that average house prices have largely plateaued in the early part of 2024.

“This reflects a housing market finding its feet in an era of higher interest rates.”

She added: “While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability.

“Activity and demand are improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months.”

The strongest performing region

Northern Ireland continues to be the strongest performing region, with annual house price growth of 3.4%, although this has slowed down slightly from March.

However, England’s southern regions continue to experience annual price falls, with Eastern England recording the biggest drop of 1.1%.

London remains the most expensive region, although prices in the capital have remained relatively flat over the past year.

Halifax is predicting a modest rise in house prices throughout the rest of 2024, but this depends on interest rates falling later this year.

The lender’s report highlights the resilience displayed by the housing market in recent months, suggesting a period of relative stability is to come.

‘The market is wonky’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “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.

“This is a function of the fact that mortgage rates remain so stubbornly high.

“Banks are pricing in the fact that the Bank of England’s cuts are expected later than they had hoped for earlier in 2024.”

She added: “In the south, prices tend to be higher – the priciest are in London where the average home costs £539,336.

“It means mortgages are bigger, and so higher rates hit harder. Buyers are having to wait, and hope that rates fall, in order to afford the kind of property they really want to live in – or lower their ambitions and buy somewhere they can bear to live with instead. As a result, demand is down, and property prices are level or falling.”

‘Sustained period of subdued activity’

Marc von Grundherr, a director of Benham and Reeves, said: “The property market is arguably a little out of shape following a sustained period of subdued activity as a result of higher mortgage rates.

“And so, while we’ve seen a string of positive house price reports in recent months, we’re yet to see the pace lift with respect to monthly growth.

“But while the road ahead may be a challenging one, we remain in a far better place than we were this time last year and that sets a solid foundation for the market to now kick on and post a stronger performance in 2024.”

Guy Gittins, the chief executive of Foxtons, said: “Although UK homebuyers continue to wait patiently for interest rates to fall, this has not dampened the growing level of market confidence that has been building since the start of the year and, in fact, many buyers are already pressing ahead with their plans to purchase with hopes of mortgage rate reductions on the horizon.

“Since a hold on interest rates in September last year mortgage approvals have been climbing, there’s been an uplift in viewing activity and more offers are being made, and so it’s clear that both buyers and sellers are responding favourably to a greater degree of market stability.”

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