A survey revealed that in February, UK house prices saw their first year-over-year increase in over a year, likely due to a decrease in borrowing expenses and a rise in housing market activity.
According to Nationwide, Britain’s largest building society, the average cost of a residence increased to £260,420 in February, a 0.7% rise from the previous month and a 1.2% increase from the previous year. This marks the first yearly growth since January 2023, after experiencing a 0.2% decline in January.
In the summer of 2022, house prices reached record highs but are currently still 3% lower.
According to Zoopla, the property market saw an increase in both buyers and sellers in the past month and is projected to result in a 10% rise in home sales this year.
Robert Gardner, the chief economist at Nationwide, stated that the decrease in loan expenses at the beginning of the year has led to an increase in the housing market.
He stated that industry statistics indicated a significant rise in mortgage applications at the beginning of the year, and surveyors also noted an increase in new buyer inquiries.
However, uncertainty about the future path of interest rates remains high, he said. He added that after falling sharply in late December, swap rates, which underpin fixed-rate mortgage pricing, have drifted back up.
According to him, even though the current borrowing expenses are significantly lower than they were last summer, the recent increase in these costs might impede the rate of progress in the real estate market if it continues.
“Although the strain on household finances has decreased due to an increase in wages, which are now surpassing inflation, it will still be a gradual process to recover from the setbacks of recent years. This is compounded by the fact that consumer confidence is still fragile,” he commented.
Tom Bill, the head of UK residential research at the upmarket estate agent Knight Frank, said: “Buyers feel confident that the only way for the base rate is down, which has seen demand and house prices pick up in recent months. However, the upwards pressure on mortgage rates in recent weeks shows sellers the importance of getting the asking price right. Banks are keen to lend and should eventually lower rates this year as inflation comes under control, which we believe will sustain positive annual growth in 2024 and see UK house prices increase by 3%.”
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According to Jeremy Leaf, a real estate agent in north London and previous head of the residential branch of the Royal Institution of Chartered Surveyors, it is not wise to solely prioritize property prices when evaluating the state of the housing market.
The speaker noted that prices affect the confidence of both buyers and sellers, but the factors of transactions and affordability, which are most strained in expensive locations like London, may hold greater significance.
“We are experiencing an increase in the number of valuations, listings, and viewings in our offices, resulting in a decrease in fall-throughs compared to last year. As a result, there has been a positive impact on the number of agreed sales, mortgage approvals, and exchanges.”
Source: theguardian.com
