property market

UK house prices rose for the second month in a row in November, according to a leading index, as a slight easing in mortgage rates helped coax more buyers into the market.

The average price of a UK property rose by £1,394 – or 0.5% – last month to £283,615, according to the mortgage lender Halifax.

It signals an uptick in activity across the housing market, where price growth has stalled over the past year because of an increase in interest rates and subsequent affordability pressures that have driven away otherwise eager buyers.

UK house prices have also been underpinned by a shortage of available properties over the past year, as many sellers wait for the market to normalise and prices to recover.

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On an annual basis, prices are down 1%, although Halifax said this was a “relatively modest” drop given the economic headwinds that have weighed on consumers over the past 12 months. Average house prices are still £40,000 above pre-pandemic levels, having been skewed during the Covid crisis, when people scrambled to buy larger homes.

“Recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers,” Kim Kinnaird, the director of Halifax Mortgages, said. “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

However, Kinnaird said house prices were unlikely to continue their upward climb into the new year. “The economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

Northern Ireland has experienced the strongest rise in house prices over the past 12 months, with the average home costing £4,294 more compared with last year, at £184,684.

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The Guardian

By Kalyeena Makortoff

Residential property prices in some parts of Britain have continued to increase strongly over the past year despite the wider housing market slowdown, according to Halifax.

More than 300 local authority areas across Britain were analysed during Q3 2023 based on Halifax’s house price index.

This was compared with Halifax’s house price data covering the corresponding period last year.

The study revealed that house prices rose in more than 70 areas, led by gains in the Brecon Beacons, Powys, in Wales, where house prices rose by an average of 17.4% year-on-year.

Kim Kinnaird, director at Halifax Mortgages, said: “There are multiple factors which can impact house prices in your local area, ranging from the mix of properties available and the extent of any new housing, to the quality of schools and abundance of job opportunities.

“What’s clear is that the UK housing market is not a single entity that performs in a uniform way across the country, there are differences. While at a national level the current squeeze on mortgage affordability has seen property prices fall over the last year, in many regions there remain pockets of house price growth. While a limited supply of properties for sale could be a factor, this also suggests in some areas, local market activity – and demand among buyers – remains strong.

“Many of the places highlighted in our research also benefit from more remote or rural surroundings and incorporate areas of outstanding natural beauty. These are traits which continue to be desirable for prospective homeowners, bucking the trend of the wider performance of the housing market.”

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Here are the top 10 local areas of Britain with the strongest house price growth over the past year, according to Halifax:

1. Powys, Wales, £216,307, £253,958, +17.4%, or £37,651
2. East Lindsey, East Midlands, £194,533, £220,421, +13.3%, or £25,888
3. Moray, Scotland, £162,258, £179,606, +10.7%, or £17,347
4. Babergh, Eastern England, £317,383, £349,965, +10.3%, or £32,583
5. Sunderland, North East, £138,579, £150,862, +8.9%, or £12,283
6. Ealing, London, £494,100, £531,127, +7.5%, or £37,027
7. Westminster/City of London, London, £714,242, £767,350, +7.4%, or £53,108
8. Bolsover, East Midlands, £167,398, £179,453, +7.2%, or £12,054

=9. Cumberland, North West, £165,346, £176,470, + 6.7%, or £11,124

=9. Rossendale, North West, £185,658, £198,102, + 6.7%, or £12,444

Here are the local areas with the strongest house price inflation in Scotland, Wales and the English regions over the past year, according to Halifax:

– East Lindsey, East Midlands, £194,533, £220,421, + 13.3%, or £25,888

– Babergh, Eastern England, £317,383, £349,965, + 10.3%, or £32,583

– Ealing, London, £494,100, £531,127, + 7.5%, or £37,027

– Sunderland, North East, £138,579, £150,862, + 8.9%, or £12,283

– Cumberland, North West, £165,346, £176,470, + 6.7%, or £11,124

– Moray, Scotland, £162,258, £179,606, + 10.7%, or £17,347

– Runnymede, South East, £439,825, £462,301, + 5.1%, or £22,476

– Torridge/West Devon, South West, £295,521, £306,436, + 3.7%, or £10,915

– Powys, Wales, £216,307, £253,958, + 17.4%, or £37,651

– Sandwell, West Midlands, £178,755, £185,798, + 3.9%, or £7,043

– Kingston-upon-Hull, Yorkshire and the Humber, £121,289, £127,523, + 5.1%, or £6,234

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said: “The UK is made up of tens of thousands of individual housing markets, which means price growth can also diverge between two areas in the same local authority.

“Broadly speaking, more affordable parts of the country are gradually closing the gap with London, where affordability is at its most stretched. The gap will get narrower without closing as buyers look beyond the capital for better value.

“The more important point for anyone interpreting house prices at the moment, is that fewer transactions can distort the data. The underlying health of the housing market is not necessarily gauged by what is happening to house prices but rather transaction volumes, which are down by more than a fifth.”

Nigel Bishop of Recoco Property Search, commented: “An increasing number of house hunters discover the upsides of rural living and favour areas that not only sit within close proximity of parks but also offer a community feel and an array of lifestyle choices.

“It’s particularly city dwellers as well as young families, who wish to raise their children in a more quaint environment, that are driving this demand for properties in a more rural setting. Boutique towns and villages with restaurants, cafés, entertainment as well as sporting facilities are especially sought-after which has resulted in property prices in such locations to go up.”

Jeremy Leaf, north London estate agent, added: “These numbers are interesting because they show the pattern of values in different areas and how markets are not the same. There is no real substitute for studying the market and area you are interested in carefully because it may well be in front of ,or behind, the national average or pattern.
“The market is made up of many different micro markets, producing different results, which is why it is so important to do the groundwork. A national average figure should be relied upon as a guide only.
“In any event, we tend to be a bit too fixated on prices. There are other factors also worth taking into consideration such as transaction numbers, discount to asking price and time on the market, as well as supply and demand. From neighbourhood to neighbourhood the picture can alter significantly.”

By Marc Da Silva

Source: Property Industry Eye

UK house prices have fared better than expected over this past year, according to new research from Savills, as it reveals its outlook for the next five years.

Despite the fact that the Bank of England is yet to lower its base rate, instead holding it at 5.25%, the fact that lenders have continued to slash prices and offer new products over recent months has helped to buoy the housing market more than had been anticipated this year.

In its revised outlook for UK house prices, estate agency Savills predicts that next year will be the second and final year of overall property price falls, with a -3% dip by the end of 2024. After this, it expects the market to return to growth for the proceeding years up to 2028.

In numbers, this looks like a 3.5% uptick in UK house prices in 2025, followed by a stronger gain of 5% in 2926, a further hike of 6.5% in 2027, and a 5% rise in 2028. Overall, this equates to a cumulative increase across mainstream residential markets of 17.9% over the next five years.

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UK house prices and transactions to recover

Much of the current outlook is based on what is expected to happen with interest rates and inflation, which will impact mortgage rates overall. The general consensus is that rates will begin to come down, with the Bank of England expected to bring its base rate down at least by the latter part of 2024.

Mortgage rates have a direct impact on affordability in the property market, and can therefore begin to affect UK house prices and transaction levels. Thankfully, Savills points out that while interest rates have now peaked, so have house price falls in this cycle.

Savills head of research Lucian Cook notes: “The expectation of a gradual reduction in rates suggests a progressive restoration of buying power and steady recovery in demand.

“We expect growth to accelerate as affordability pressures ease, with the strongest growth forecast for 2027 when rates reach their long-term neutral level. From there we expect growth to settle at a rate broadly in line with income growth.”

Transaction levels have undoubtedly suffered in some – but not all – parts of the market, although some of this drop-off in activity can be attributed to a slowdown in relation to the post-Covid boom. Of course, the cost of living crisis and high inflation have also had an impact on this.

Cash buyers have been more active than ever in the current climate, which is unsurprising, and this is another factor conrtibuting towards keeping UK house prices afloat. However, by mid-2024, Savills expects transaction levels to coincide with recovery of UK house prices, as mortgage affordability improves.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

North, Wales and Scotland hold their own

According to the report, the strongest performing markets at the moment remain the north of England, as well as Scotland and Wales. However, Savills also points towards a faster recovery taking place in London, as the economic outlook improves, after it has lagged behind the rest of the UK for some time.

The report hones in on each of the UK’s regions, while also noting that the UK property market as a whole is “in the late stages of a typical housing market cycle”. But it offers an interesting insight into how the more affordable property markets can often show the most resilience.

For example, between now and 2028, the top-performing regions in terms of house price growth are predicted to be the north east with 21.4% cumulative growth, the north west with 20.2% cumulative growth, and Yorkshire and the Humber and the West Midlands, both with 20.2% cumulative growth.

These figures are all comfortably above the average level of growth for UK house prices, and far surpass London’s prediction of a 13.9% total house price rise over the five-year period.

The report notes: “In 2024, further modest price falls will be driven by stretched affordability across all regions, though slightly more so in London and the South East where buyers continue to need to accumulate much bigger deposits and borrow more relative to their income than the national average.

“Once the Bank of England begins to cut the base rate in the second half of 2024, we expect affordability to ease with every region seeing improving conditions compared to 2023. The more affordable markets in the North, where mortgaged buyers are under less strain, should see the most recovery initially.”

By Eleanor Harvey

Source: Buy Association

UK house prices unexpectedly rose last month, according to Nationwide building society, with some economists who had predicted a fall calling it a “massive surprise”.

The 0.9% month-on-month increase – which added more than £1,600 to the cost of a typical property – has been linked to a shortage of homes on the market for buyers to choose from. The last time Nationwide’s index showed a bigger monthly increase was in March 2022.

However, Britain’s biggest building society said the average property value was still down year on year – with a 3.3% drop in October compared with the same month last year. This is down from an annual drop of 5.3% recorded in September.

Nationwide said the average price of a UK property was £259,423 at the end of October – up from £257,808 a month earlier.

Robert Gardner, the lender’s chief economist, said: “The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.”

Sarah Coles, the head of personal finance at the investment platform Hargreaves Lansdown, said: “October’s bump comes down to a shortage of property for sale, making it more difficult for buyers to drive a hard bargain.” Sellers “sat on their hands” in October, she added.

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Gardner said there was little sign of “forced selling”, which would exert downward pressure on prices, as labour market conditions were solid and mortgage arrears were at historically low levels, despite difficulties for some homeowners.

Other commentators said the Bank of England’s decision on 21 September to keep interest rates on hold after a string of increases gave an autumn fillip to the housing market and would have calmed the nerves of many would-be buyers.

The housing market in Britain has slowed in recent months as the Bank has raised rates sharply to counter a rise in inflation triggered in part by Russia’s invasion of Ukraine, which sent energy prices soaring.

Gardner said that, despite last month’s unexpected bump, UK housing market activity had “remained extremely weak”, with only 43,000 house purchase mortgages approved in September – about 30% below the monthly average in 2019.

He added: “Activity and house prices are likely to remain subdued in the coming quarters. Despite signs that cost of living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer inquiries.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Imogen Pattison, an assistant economist at the consultancy Capital Economics, which had forecast a 0.6% fall in October, said last month’s large increase in house prices “was a massive surprise, given higher mortgage rates should be severely restricting the number of people able to buy and the amount they can spend”.

Most experts agreed that this was not the start of a recovery for the property market.

Last week, Lloyds Banking Group predicted UK house prices would continue to slide this year and in 2024, and would not start to recover until 2025.

Santander expects a larger drop of about 7% for the whole of 2023, followed by a 2% fall in 2024. The estate agent Knight Frank also predicts a 7% fall this year but a 4% decrease next year.

By Rupert Jones

Source: The Guardian