Halifax: Housing market is 'finding its feet' as monthly growth remains flat

The housing market is still “finding its feet,” Halifax has claimed, after its latest data showed house prices appeared to stagnate during April.

The April Halifax House Price Index recorded a small 0.1% monthly rise in average values after a 0.9% drop in March.
Prices were up 1.1% annually to £288,949.

Northern Ireland remained the strongest performing nation or region in the UK, with house prices up by 3.4% on an annual basis in April, though this slowed from 4.1% in March. 

The North West continues to see the strongest growth in England, up by 3.3% on an annual basis to £231,599.

Annual price falls are predominately found in the south of England, as the ‘North-South’ divide across English regions is sustained, Halifax said.

Properties in Eastern England recorded the biggest decline of 1.1%, with homes selling for an average of £329,723, a drop of £3,541 over the last year.London remains the most expensive region in the UK to buy a home, with an average price of £539,336. However prices in the capital have been relatively flat over the last year, up by just 0.1%.

Amanda Bryden, head of mortgages at Halifax, said: “While there is always much scrutiny of monthly price changes – and a degree of volatility is to be expected given current market conditions – the reality is that average house prices have largely plateaued in the early part of 2024.

“This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months.

“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties.

"We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.

“However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals. Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.

“If, as is still expected, downward moves in bank rate come into play later this year, fixed mortgage rates should fall. Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024.”

Commenting on the index, Tom Bill, head of UK residential research at Knight Frank said: “House prices continue to move sideways as higher mortgage rates hit market momentum. As the prospect of the first rate cut since March 2020 drifts further into the distance, borrowing costs have edged higher and budgets have been squeezed. 

“A short-lived burst of positivity in the early weeks of this year led to higher supply, increasing downwards pressure on prices. 

“A wave of homeowners currently rolling off sub-2% mortgages is adding to the financial pressures in the system. As a summer rate cut moves onto the horizon, we expect UK house prices to respond and rise by 3% in 2024.”

Nathan Emerson, chief executive at Propertymark, added: “Buyers and sellers are starting to accept the new reality of the housing market in the face of current interest rate levels, and it is encouraging to see that house prices are increasing, giving sellers the confidence they need to put their house onto the market during what will be a busy time for the housing market. 

“Propertymark’s latest Housing Insight Report showed there was an 18% increase in new properties coming to the market. Also, the number of mortgage approvals made to home buyers increased from 56,100 in January to 60,400 in February, according to recent Bank of England figures. Hopefully the UK Government takes the initiative and encourages growth in the housing market by meeting its own housing targets.”