Home costs rose in March for the third month in a row as an easing of mortgage charges drew consumers again into the market, information from Halifax reveals.
Common home costs elevated by 0.8 per cent final month, after a 1.2 per cent rise in February, based on the mortgage lender’s newest home value index. Yr-on-year costs had been 1.6 per cent greater.
The everyday UK property now prices £287,880, in opposition to £285,660 the earlier month.
Kim Kinnaird, director at Halifax Mortgages, mentioned: “The UK housing market continues to point out resilience following the sharp downturn on the finish of 2022. The principal issue behind this improved image has been an easing of mortgage charges. The sudden spike in borrowing prices that we noticed in November and December has now been largely reversed.”
After a lockdown-induced growth that pushed costs to file highs, the market has gone into reverse in latest months. The price of dwelling crunch and fears of a recession hit shopper confidence, as did the uncertainty brought on by the mini-budget in September, which resulted in a soar in mortgage charges. Borrowing prices have retreated since then.
The speed on a median five-year fastened mortgage in March final yr was about 1.8 per cent. That rose to above 5.5 per cent after the mini-budget however is now round 4.8 per cent.
Kinnaird mentioned the figures instructed relative stability within the housing market at the beginning of 2023 “characterised by a partial restoration in exercise and transactions, particularly when in comparison with the numerous drops seen on the finish of final yr”.
The most recent Financial institution of England information confirmed mortgage approvals rose in February for the primary time since August, which economists mentioned may very well be an indication that the “worst is previously”. Mortgages authorised for home purchases beat economists’ expectations to succeed in 43,500 in February, up from 39,600 in January.
Regardless of the rise in approvals, general mortgage lending fell from £2 billion in January to £700 million in February, which, exterior of the pandemic interval, marks the bottom degree of web borrowing since April 2016.
The rise in home costs compares with figures from the mutual mortgage lender Nationwide, which confirmed that costs within the UK fell for the seventh month in a row in March. Nationwide mentioned costs retreated one other 0.8 per cent, taking the common worth of a house within the UK all the way down to £257,122. That was 3.1 per cent decrease than a yr in the past and took costs again to roughly the place they had been in January 2022, based on its home value index.
Nationwide and Halifax’s figures are primarily based on their very own mortgage approvals.
Martin Beck, chief financial adviser to the EY Merchandise Membership, mentioned: “Halifax’s measure of home costs in March confirmed one other rise, contrasting with weak point within the Nationwide index, and complicating a studying of the housing market. Taking the Halifax measure in isolation, it affords one other signal that the economic system is holding up in opposition to headwinds from excessive inflation and rising rates of interest significantly better than many anticipated.”
He mentioned mortgage approvals and survey proof of housing transactions each appeared to have bottomed out however costs nonetheless seemed “very stretched on most affordability measures”. The typical charge on a brand new mortgage has elevated by over 250 foundation factors in solely 12 months, and there’s a danger that banking points overseas could lead UK lenders to connect tighter situations to dwelling loans, Beck mentioned.
Tom Invoice, head of UK residential analysis at Knight Frank, mentioned: “Exercise has been strong however unspectacular within the UK housing market this yr because the hangover from the mini-budget slowly fades. Costs are broadly in a holding sample however might be examined this spring as provide rises and better mortgage charges trigger a pointy consumption of breath amongst a rising variety of consumers and householders.”
The Financial institution of England has raised rates of interest to 4.25 per cent to sort out double-digit inflation. It has indicated that they may rise additional.