UK house prices rise for first time in over a year as borrowing costs fall

UK house prices rise for first time in over a year as borrowing costs fall

The UK housing market has shown signs of recovery in February, with house prices increasing on an annual basis for the first time in over a year, according to Nationwide. The lender reported that the average price of a UK property rose by 1.2% compared to a year ago, and by 0.7% compared to January, reaching £260,420.

Nationwide attributed the improvement to the decline in borrowing costs around the turn of the year, which boosted mortgage demand and buyer confidence. However, it also warned that the near-term prospects remain uncertain, as interest rates may rise again and affect affordability and demand.

The data from Nationwide is based on mortgages approved by the lender, and does not capture cash buyers. It suggests that the housing market is recovering from the slump that started in the summer of 2022, when house prices reached a record high and then fell due to rising interest rates and cost of living pressures.

Nationwide said that house prices are now around 3% below the peak levels of 2022, after adjusting for seasonal effects.

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Other indicators also point to a revival in the housing market. The Bank of England reported yesterday that new mortgage approvals rose in January to their highest level since October 2022, although they were still low by historical standards. The Royal Institution of Chartered Surveyors (RICS) also said that new buyer enquiries increased in January, and that house price expectations turned positive for the first time in four months.

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However, not all forecasts are optimistic about the outlook for the housing market. Halifax, Britain’s biggest mortgage lender, said it expects house prices to fall by between 2% and 4% in 2024, as high interest rates continue to weigh on affordability and sales completions.

It said it expects a partial recovery in the market later in the year, as interest and mortgage rates ease. The UK’s biggest building society, Nationwide, also said it expects house prices to suffer a “low single digit decline” or remain “broadly flat” in 2024.

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Source : THE GUARDIAN

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