UK house prices fall for first time in three months amid ‘subdued’ market

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UK house prices fall for first time in three months amid ‘subdued’ market- Average price of home down 0.2% from February to March, to £261,142, says Nationwide

According to the Nationwide Building Society, the UK housing market was “subdued” in March, with prices marginally declining from the previous month due to the market’s prolonged impact from high mortgage rates.
After rising by 0.7% over the previous two months, home prices have now declined for the first time in three months.
After adjusting for seasonality, the average price of a home decreased by 0.2% from February to March, coming in at £261,142.

Although compared to the same month in 2018, March’s number increased by 1.6%, which was faster than the 1.2% yearly change in February.
“Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards,” stated Robert Gardner, chief economist of Nationwide.

For instance, in January, the number of mortgages issued for home purchases was roughly 15% lower than it was before the pandemic. This mostly illustrates how affordability is impacted by rising interest rates.

 

When a typical five-year agreement had reached above 5.5% in the middle of last year, mortgage rates had drastically reduced. According to data from Nationwide, the average was less than 4.5%.
The building society, which is the third-largest mortgage provider in the nation and is in the process of paying £2.9 billion to acquire Virgin Money, reported that consumer sentiment was improving as a result of lower inflation rates and less pressure from the cost of living. Surveyors also noted an increase in inquiries from potential new customers.

Additionally, it showed that salary growth was exceeding the growth of property prices, which would lower the cost of homeownership for potential purchasers.

“Activity is likely to gain momentum if these trends are maintained, though the pace of the recovery is likely to be heavily influenced by the trajectory of interest rates,” stated Gardner.
Although the Bank of England’s base rate is still 5.25%, officials hinted last month that they may lower interest rates three times this year in response to “encouraging signs” of declining inflation.

By the end of 2024, rates are expected to decrease to roughly 4.5%, with investors anticipating a first cut in June or August.

 

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