Cyprus Mail

UK house prices rise by most since Dec 2022

uk houses

British house prices rose in March at their fastest annual pace since December 2022, adding to signs of a modest recovery in the market which has been squeezed by high interest rates, figures from mortgage lender Nationwide showed on Tuesday.

House prices were up 1.6 per cent in March from a year earlier, picking up from annual growth of 1.2 per cent in February, although the climb was smaller than the average 2.4 per cent forecast of economist in a Reuters poll.

Prices fell 0.2 per cent in March alone, the first drop since December 2023 after a 0.7 per cent increase a month earlier, bucking economists’ expectations in a Reuters poll for a 0.3 per cent rise on a seasonally adjusted basis.

“Activity has picked up from the weak levels prevailing towards the end of 2023 but remain relatively subdued by historic standards,” Nationwide economist Robert Gardner said.

British house prices jumped more than 20 per cent between the start of the COVID-19 pandemic and late 2022, but then fell slightly as home sales were curbed by bond market turmoil during Liz Truss’ brief premiership and a sharp rise in interest rates.

Mortgage approvals in January were 15 per cent lower than before the COVID-19 pandemic, reflecting the impact of higher rates.

With house prices rising more slowly than wages – which are up around 6 per cent from a year ago – affordability constraints are gradually easing, Gardner said.

The Bank of England increased its main interest rate to 5.25 per cent in August 2023, its highest since 2008. Financial markets see a first cut in June or August, with rates forecast to drop to around 4.5 per cent by the end of the year.

Across the first quarter as a whole, house prices were 1.1 per cent higher than the previous quarter, the fastest three-month rise since the three months to July 2022, Nationwide said.

Over the past year, the biggest price rise was in Northern Ireland, where they rose 4.6 per cent, while the largest fall was in southwest England where prices fell 1.7 per cent. Prices in London increased by 1.6 per cent.

Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, predicted a 4 per cent rise in house prices for 2024.

“Forward-looking indicators continue to suggest house prices will keep rising as mortgage rates gradually tick down,” he said.

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