Following UK house prices showing an annual rate of growth to 1.2% in February according to Nationwide data, industry experts have discussed what it may mean for the year ahead and the market as a whole.
Tom Brown, Managing Director, Real Estate at Ingenious, said: “The UK property sector continues to demonstrate its resilience and popularity in the face of high inflation and higher borrowing rates. Nationally, there remains a significant shortage of housing inventory across most locations and price points. Consequently, any slow-down in sales volumes from homeowners is likely to be offset by increased demand from renters and investors.
“However, it’s essential to note that the situation is not uniform throughout the country and across all price ranges. When analysing opportunities, it is key to understand the underlying subsectors and regional dynamics. Taking too broad a view of the market can be misleading. For instance, the institutional housing sector has experienced fewer disruptions compared to the residential sector due to its long-term investment horizon, rental growth and substantial capital inflows.
“We are continuing to work with borrowers and investors and delivering for them. The dynamic landscape of the markets that we serve, and the wider economy requires us to evolve to stay relevant in addressing diverse challenges including the climate crisis, and changes in the way we are all living. Ingenious is broadening the reach of our widely embraced development lending product. This expansion aims to offer extended terms for stabilisation to specialised developers within the rental sectors. Additionally, special lending terms will be introduced for developers with a specific focus on minimising embedded carbon in their construction practices.”
Nathan Emerson, CEO of Propertymark, comments: “The housing market always reacts to changing economic trends, so it is encouraging to witness many homeowners seeing both a month on month and year on year uplift on the price of their homes. This should help provide people with the confidence to potentially sell where they may have been holding back. The UK Government need to build on this as a chance to prove that the economy is heading in the right direction.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country said: “Positive signs for the property market are turning from a trickle to a flood this year, with annual house price change increasing for the first time in 13 months.
“Demand is building as lower mortgage rates have encouraged buyers to restart their property search, and plunging inflation suggests better news is to come.
“Some buyers, assuming that we are at the peak of the rate rise cycle, are still waiting in the wings for the first downward nudge in interest rates before they return to the market. But this means there is a lot of pent-up demand that could soon be unleashed.
“We’re heading into one of the prime seasons for home sales, and sellers should look at this as a great time to get their home on the market.
“Properties tend to sell fastest at this time of year, and motivated buyers are still snapping up homes in desirable areas.”
Jonathan Hopper, CEO of Garrington Property Finders, comments: “It’s a bounceback, not a blip. Nationwide’s data shows house prices have risen in four out of the past five months, and the upward momentum is now so strong that prices have climbed 1.2% compared to this time last year.
“Crucially the market has also become more free-flowing. For sale signs are starting to sprout from homes across the country, and estate agents report a steady uptick in interest from both buyers and sellers.
“Two things are driving this resurgence in activity – mortgages have become more affordable and there’s a widespread sense that house prices have definitively turned a corner.
“Increasing numbers of buyers who sat on their hands last year are deciding that now is the time to strike, before prices start to accelerate upwards.
“For many, the case for now is compelling. The Nationwide’s data shows that average prices are 3% lower than the highs recorded in the summer of 2022, and while interest rates are many times higher than their pre-Truss levels, mortgage borrowing is notably cheaper than it was last year.
“Many lenders have paused the flurry of interest rate cuts seen at the start of the year while they wait for the Bank of England’s next move, and a little bit of stability in borrowing costs may be no bad thing as further big cuts at this stage could prompt a resurgent market to get carried away.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “Today’s data shows that the property sector is showing signs of recovery. With a decline in inflation YoY and the peaking of interest rates, the overall outlook has considerably improved. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value. Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.
“A survey conducted by the Royal Institute of Chartered Surveyors (RICS) uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns. Although the lead-up to the general election may pose some uncertainty, a subsequent boost in productivity and a decrease in interest rates are expected. The hope is that any new government can address local planning issues to stimulate construction and guide the economy out of the downturn.
“As a debt provider, at ASK our focus will be on supporting the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives by adopting a flexible underwriting approach, thereby continuing to offer opportunities for the growing number of private individuals opting to invest in property debt.”
Iain McKenzie, CEO of The Guild of Property Professionals, comments: “We’re expecting to see the housing market back on the march this year, and a return to positive annual price growth is another good sign.
“Growth will be welcomed by sellers that have been cautious to stick out the ‘for sale’ signs since prices began to ease.
“Interest rates are holding steady, but we expect them to creep down through the year. Lenders have been offering better deals for first-time buyers in recent months and we hope to see that trend continue.
“This resurgence in activity is a promising sign that should bring more buyers out of hiding and encourage growth in the sector. We are already seeing this play out, with HMRC also recording an uptick in sales at the start of the year.
“While uncertainties remain, particularly surrounding future interest rate movements, the rebound of swap rates, which influence fixed-rate mortgage pricing, indicates a positive trajectory.
“The cost-of-living crisis remains obstinate, but as the stranglehold of surging inflation eases, mortgage affordability should become less of a worry.”
