UK housing market sees rebound
The United Kingdom’s housing market has seen an upswing as annual house price growth returned to positive territory for the first time in over a year in February.
According to the latest data from Nationwide, house prices surged by 0.7% to 525.6 on a monthly basis, signalling a promising shift in the market.
The annual rate of change, which had been languishing in negative territory since January 2023, saw a remarkable improvement, rising to 1.2% year on year. The average price of houses, not seasonally adjusted, rose to £260,420 from £257,656 in the previous month. This positive trajectory marks a significant rebound, particularly after enduring a challenging period of stagnation and decline.
Robert Gardner, Nationwide’s chief economist, expressed optimism about the recent developments, stating: “UK house prices rose by 0.7% in February, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to 1.2% in February, from -0.2% the previous month.”
The resurgence in housing prices can be attributed, in part, to the decline in borrowing costs witnessed around the beginning of the year. Lower mortgage rates prompted an increase in mortgage applications and new buyer enquiries, injecting vitality into the market.
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Factors that could impact the future
The future remains uncertain, however, with concerns looming over the trajectory of interest rates. Despite borrowing costs currently resting below the highs of the previous summer, a recent upward trend in swap rates threatens to temper the pace of the housing market recovery.
Karen Noye (pictured), a mortgage expert at Quilter, emphasised the market’s positive momentum, highlighting the recent uptick in both transaction levels and prices. Noye noted, “Yesterday’s monthly property transactions data revealed the first monthly uptick in transactions, up 2% to 82,000 in January 2024 compared to 80,500 in December 2023.”
Furthermore, there are indications that the government is contemplating the reintroduction of 99% mortgages, potentially revitalising opportunities for first-time buyers. Noye said such initiatives carry inherent risks, underscoring the importance of prudent financial guidance for prospective homebuyers.
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