UK Housing Market Shows Modest Growth Amidst Uncertainty
- Average UK house prices rise by 0.1% month-on-month and 1.1% annually in April 2024.
- Affordability challenges persist due to increasing mortgage rates and regional disparities.
UK Housing Market: Modest Growth Amid Affordability Challenges
The UK housing market has shown signs of modest growth in April 2024, with house prices rising by 0.1% compared to the previous month, and an annual increase of 1.1%. The average house price in the UK now stands at £288,949. This growth is relatively subdued, especially when considering the rapid 25% increase in house prices from February 2020 to September 2022.
Regionally, Northern Ireland has seen the fastest growth over the past 12 months, with house prices increasing by 3.4% in the year to April 2024. However, this growth has slowed down from the 4.1% year-on-year increase reported in March 2024. The average house price in Northern Ireland is now £192,502. In contrast, Eastern England experienced the most significant price falls, and London's prices remained relatively unchanged.
The number of new homes completed in Northern Ireland has dropped to the lowest point in 64 years, contributing to a slowdown in the property market. The first quarter of 2024 was particularly weak for home sales in Northern Ireland, marking the weakest start since 2015.
Despite the recent stagnation, Halifax expects property prices to rise modestly over the course of 2024. This forecast is cautious due to the increasing mortgage rates, which have been influenced by rising swap rates and the Bank of England's benchmark rate expectations. The higher borrowing costs have led to affordability challenges, particularly for first-time buyers who are now targeting smaller properties.
Navigating Uncertainty: Insights into the UK Housing Market
The housing market's resilience in recent months and the fall in mortgage rates since last summer, combined with strong growth in nominal wages, have somewhat eased the mortgage affordability problem. However, the market remains unpredictable, with various indices reporting differing views on property price trends.
The construction industry, which was heavily impacted by the financial crash in 2008, is predicted to see a 7% decline in new-build housing and repair, maintenance, and improvement (RMI). Political promises from the Labour Party and the Conservatives to build more homes over the next few years could potentially address the housing supply issue.
In summary, the UK housing market is experiencing a period of modest growth with regional disparities. The market's future trajectory is uncertain, with predictions of both modest rises and potential falls in house prices. Affordability remains a key concern, especially for first-time buyers, as mortgage rates continue to climb. The industry is responding to these challenges with a mix of caution and adaptation to the new market realities.