“A month-on-month growth in house prices is a sign of prosperous green shoots on the run-up to spring, which is historic for its higher demand from buyers and sellers. This is showing strength within the market and signs of a stabilising economy”
– Nathan Emerson – Propertymark
Albeit slightly historic, the latest ONS HPI has revealed that negative house price growth across the UK continued to ease in February.
According to provisional estimates, average UK house price annual inflation was negative 0.2% in the 12 months to February 2024, up from negative 1.3% (revised estimate) in the 12 months to January 2024.
In February, the price of a typical UK home stood at £281,000 – unchanged from 12 months ago. Average house prices in the 12 months to February 2024 decreased in England to £298,000 and decreased in Wales to £211,000 (negative 1.2%). However, they increased in Scotland to £188,000 (5.6%). The average house price increased in the year to Q4 (Oct to Dec) 2023 to £178,000 in Northern Ireland (1.4%).
On a non-seasonally adjusted basis, average UK house prices increased by 0.4% between January 2024 and February 2024, compared with a decrease of 0.7% during the same period 12 months ago.
Of English regions, annual house price inflation was highest in the North East, where prices increased by 2.9% in the 12 months to February 2024. London was the English region with the lowest annual inflation, where prices decreased by 4.8% in the 12 months to February 2024.
Tom Bill, head of UK residential research at Knight Frank, said: “The prospect of lower mortgage rates becomes more remote with each release of economic data.
“Stubborn inflation means the five-year swap rate is just under 4.5%, which isn’t good news for anyone hoping to agree a mortgage starting with a ‘3’ any time soon. Higher borrowing costs, increased supply and a wave of owners rolling off sub-2% mortgages agreed in early 2022 are all putting downward pressure on house prices.
“That said, mortgage approvals hit a 17-month high in February, which means there should be a recognisable spring bounce this year. We expect UK prices to rise by 3% in 2024 as core inflation is tamed and borrowing costs eventually begin to fall.”
Nathan Emerson, CEO of Propertymark, said: “A month-on-month growth in house prices is a sign of prosperous green shoots on the run-up to spring, which is historic for its higher demand from buyers and sellers. This is showing strength within the market and signs of a stabilising economy.
“Propertymark’s own Housing Insight Report showed that there was an 18 per cent increase in new properties coming to the market. Furthermore, the number of mortgage approvals made to home buyers increased from 56,100 in January to 60,400 in February, according to recent Bank of England figures, showing that all signs are pointing in the right direction, which should provide aspiring or current homeowners with the confidence they deserve right now.”
Matt Thompson, Head of Sales at Chestertons, says: “Although some buyers waited for the Spring Budget before making an offer, London’s property market remained busy throughout February. The steady growth that London property values witnessed since the beginning of the year was thereby a key trigger for house hunters wanting to finalise their search sooner rather than later.”
Kay Westgarth, Sales Director at Standard Life Home Finance, said: “Amid falling inflation and an acceptance of a ‘new normal’ for mortgage rates, today’s figures show that the property market remains on a stable footing. With a base rate cut firmly on the horizon, we can expect to see renewed competition among lenders vying for market share and sustained activity as we move through the year.
“Despite this optimistic outlook, we cannot ignore the high mortgage repayments currently faced by today’s borrowers, particularly those moving from a fixed-term plan on lower rates. House prices comfortably outpacing wage growth for a sustained period means many are having to dig deeper into their pockets to meet monthly repayments.
“It is important that people who feel their affordability has been challenged seek out a professional adviser to understand what options are available to secure a more stable financial future.”
CEO of Yopa, Verona Frankish, commented: “With inflation continuing to fall, homebuyers will be hoping that an interest rate cut is right around the corner and this should only add to the growing market confidence seen in recent months.
“So far this year, market momentum has been building gradually and we expect that when rates do finally fall, this growing momentum will accelerate, driving house price growth in the process.”
Director of Benham and Reeves, Marc von Grundherr, commented: “Further positive monthly growth is, of course, very welcome. However, it’s important to remember that given the lag in reporting sold prices, today’s figures related to February house prices and a market that has barely shaken off the impact of the Christmas lull in activity.
“What we’ve seen since is a consistent increase in mortgage approvals and growth in mortgage approved house prices and so it’s only a matter of time before the same becomes evident with respect to sold prices.”
