House prices rose by 0.7 per cent between February and March, according to the latest figures from the Office for National Statistics.
This means the average UK home is now worth 1.8 per cent more than a year ago, which is the first annual increase seen since June last year.
A typical house is now worth £283,000, £5,000 more than 12 months ago, although still below the peak recorded at the end of 2022.
Many real estate experts believe that house prices will continue to rise in the future.
On the rise: In the year to March 2024, house prices rose by 1.8% according to the latest ONS House Price Index
Taking into account seasonal adjustments, prices rose 1.1 percent in March.
Ed Phillips, chief executive of estate agency Lomond, said: “House prices have continued to rise month-on-month as market confidence has increased, however we have also seen the first annual rate of growth since June last year. , suggesting that the market is heading in the right direction.
“Therefore, although homebuyers still face substantially higher borrowing costs, the outlook for next year remains positive, particularly now that inflation has eased and an interest rate cut is on the horizon.”
Marc von Grundherr, director at estate agents Benham and Reeves, added: “We have seen steady growth in mortgage approval levels throughout 2024 so far and, although house prices have remained firm, it was only It was only a matter of time before this initial indicator of market improvement Healthcare began to drive a stronger growth rate.
“The first annual increase since last summer suggests this is starting to materialize and, while we expect a more stable year overall, there is every chance that a summer interest rate cut could trigger a price boom. as buyers are encouraged by early signs of improving borrowing affordability since March 2020.’
For all the excitement around today’s positive numbers, they could be a blip rather than a recovery.
However, other experts believe we could see further declines in house prices before the market begins to recover again.
This is because, among other things, ONS data based on Land Registry figures is based on sales prices and therefore arrives with a significant delay.
This means that sales prices in March will represent sales agreed upon months earlier, and many of them are likely already in place last year.
Between September of last year and the end of January of this year, mortgage rates were on a downward trajectory, which may have encouraged buyers to act.
> What’s next for mortgage rates?
However, since the beginning of February mortgage rates have risen again, which may translate into a drop in house prices in the coming months.
Jonathan Hopper, chief executive of Garrington Property Finders, says prices have cooled as buyers have more choice
Jonathan Hopper, chief executive of agents Garrington Property Finders, said: “Despite all the enthusiasm today’s positive figures have generated, they could be a blip rather than a recovery.”
‘One statistical manager’s research might even suggest they are more likely to be a sign of how many buyers kicked off in January, rather than evidence of a market galloping at full speed.
‘These figures reflect many of the sales that were agreed during the brief but heady weeks at the start of the year, when interest rates fell and demand soared.
“Since then, interest rates have risen again, dampening buyer demand just as the number of homes coming onto the market has increased rapidly.”
New construction prices rise
Average prices for new builds rose 17 per cent in the 12 months to March, while existing homes fell 1.8 per cent.
Daniel Norman, chief executive of property software company Aprao, said: “When it comes to the recovery of the UK housing market, it is fair to say that it has been largely driven by the country’s housebuilders and the construction sector. new homes, rather than the purchase of existing homes. actions by home buyers.
“New build home price growth has far outpaced the rest of the market for many months and this suggests that, while buyers may remain constrained by the issue of higher mortgage rates, they are willing to pay the premiums associated with newly built homes in order to reap the benefits they offer.’
New construction premium: New construction prices are booming while used home values are falling
Homes in Scotland see biggest increase
More locally, prices in Scotland rose by 6.7 per cent, while in Northern Ireland average house prices rose by 4 per cent.
Average prices in England and Wales rose by a modest 1 per cent and 1.3 per cent respectively.
However, within English regions there was a lot of variation in price changes.
In Yorkshire and the Humber, prices rose by 5 per cent in the 12 months to March.
Meanwhile, at the other end of the spectrum, London saw average prices fall by 3.4 per cent in the 12 months to March.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “House prices remain high by historical standards, although the national average figure masks some regional fluctuations.
‘Uncertainty around interest rates, economic stability and the cost of living is leading to caution, properties staying on the market longer and tougher price negotiations. Borrowing is expensive: It’s cheaper than it was, but these relatively high rates are limiting purchasing power and driving some potential buyers out of the market.
“The sun brings deals and we have noticed an increase in offers in recent weeks.”
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