After a period of relative stability over the past six months, house prices fell in March 2024 raising questions over how this could impact mortgage rates.
According to data from Halifax* average house prices fell by £2,900 to £288,430 between February and March 2024.
This represents a drop of -1.0% in March, following an increase of +0.3% in February.
Overall, average house prices have risen +2.0% compared to the previous quarter and are around +0.3% higher annually.
“That a monthly fall should occur following five consecutive months of growth is not entirely unexpected, particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022. Despite this, house prices have shown surprising resilience in the face of significantly higher borrowing costs,” says Kim Kinnaird, Director, Halifax Mortgages.
“Affordability constraints continue to be a challenge for prospective buyers while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
Data from Nationwide paints a similar picture with UK house prices falling by -0.2% in March 2024. However, again the annual view is more positive with the annual rate of growth reaching +1.6% in March, up from 1.2% in February.
“Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards. For example, the number of mortgages approved for house purchases in January was around 15% below pre-pandemic levels,” says Nationwide’s Chief Economist, Robert Gardner.
“This largely reflects the impact of higher interest rates on affordability. While mortgage rates are below the peaks seen in mid-2023, they remain well above the lows prevailing in the wake of the pandemic.”
According to Kinnard, financial markets are less optimistic about the timing or degree of Base Rate cuts. This is due to core inflation proving to be ‘stickier’ than expected, which has stalled the decline in interest rates that was experienced during the turn of the year.
However, the broader picture is that house prices are still higher year-on-year and almost £50,000 above pre-pandemic levels.
“Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market,” Kinnard elaborates.
“And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work.”
Although the decline in mortgage rates has slowed since the beginning of 2024, there are still more competitive deals out there than in previous years for those willing to shop around.
Whether you are looking to buy your first home or have an existing mortgage deal that is due to end soon, talking to a mortgage broker can help to make sure you get the best deal. We’ve been pairing clients with their perfect mortgage for over 40 years, comparing the latest rates of 50+ lenders to find the right one for you.
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With the demand for homes remaining high there is still a strong market out there for people looking to sell their property. If you are looking to move to a new home and need to sell your existing property, getting an accurate property valuation is an important first step in your property journey. Contact us today and our expert team will get you moving on the right foot.
When it comes to selling your home, our distinctive Edward Mellor Estate Agents “For Sale” have been lining the streets of Stockport, Tameside, Cheshire and Manchester for decades. We have the passion and the experience to guide you every step of the way with honest, professional advice and proactive marketing to help you achieve.
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*https://www.halifax.co.uk/assets/pdf/march-2024-halifax-house-price-index.pdf
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Mortgages | Selling | March 2024 Budget | Tips for First-Time Buyers
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