UK House Price Growth Takes a Hit Amidst Rising Costs

by | Thursday 2nd May 2024 | Mortgage News

UK House Price Has Dropped According To Nationwide

UK House Price Has Dropped According To Nationwide

UK house price growth has hit a stumbling block, with a recent report from Nationwide building society revealing a 0.4% fall in average property costs last month compared to March 2024. This dip marks a significant slowdown, dragging the annual rate of growth down to a mere 0.6% from a previously healthier 1.6%. In this article we will look into the statistics on UK house price growth and explore what the implications of a slump might look like.

Lack Of Enthusiasm Stalls UK House Price Growth

What’s behind this unexpected decline? Well, it seems a combination of factors is at play. According to Nationwide, the ongoing burden of living expenses coupled with a fresh uptick in average mortgage rates has contributed to a cooling of buyer enthusiasm. This is not entirely surprising given the current economic climate. Although many estate agents and mortgage brokers (such as ourselves at Oportfolio) have seen an increase in first-time buyer interest over the last few months, there are still thousands of buyers ‘holding off’ on purchasing until things hopefully settle down politically and economically.

The cost of borrowing has been steadily creeping upwards, driven by market expectations that the Bank of England may delay its much-anticipated interest rate cuts. It was once the commonly held consensus that in their next announcement in May 2024, that the Bank of England would reduce the base rate below 5.25%. However in recent weeks this has changed and many expect now that the bank will hold rates again at 5.25%. This shift in sentiment has prompted lenders to adjust their rates accordingly, with the average two-year fixed residential mortgage rate now inching closer to the 6% mark.

UK House Price Growth And The Bank Of England Base Rate

Also, the bank’s recent indication that it’s in no rush to ease concerns over inflation has only added to the uncertainty. Despite robust wage growth, buyers are finding it increasingly challenging to navigate the affordability landscape. For many, the allure of fixed-rate mortgage deals has been tarnished by the prospect of rising borrowing costs, with lenders like Halifax announcing plans to hike rates on much of their mortgage range. This has left many existing borrowers facing tough decisions as their relatively favourable fixed-rate deals come to an end.

April 2024 Was The Second Consecutive Month House Price Growth UK Decline

The ripple effects of these developments are evident in the housing market, with April marking the second consecutive month of price declines. While the average home now stands at £261,962, a 4% drop from its peak in 2022, the picture varies across different regions of the UK. Of course it’s worth noting that Nationwide’s data is based solely on its own mortgage lending, excluding cash buyers and buy-to-let transactions. So these figures may not reflect every lender’s findings. Nonetheless, the slowdown in house price growth underscores the broader economic challenges facing both buyers and sellers alike. It is clear that when it comes to annual house price growth, UK property is faultering.

Speak To A Mortgage Advisor If You Are Looking To Buy Or Sell In 2024

In essence, while the UK property market remains resilient, the recent dip in house price growth serves as a timely reminder of the delicate balance between affordability and market dynamics. As we navigate the months ahead, it will be crucial to monitor how these factors continue to shape the landscape of homeownership in the UK. If you are potentially looking to buy or buy and sell in 2024, you need the help and guidance of a property professional. At Oportfolio it is our job to keep up to date with all information and updates on the UK property market. If you have anything that you want to chat through with one of our mortgage brokers, then please feel free to give us a call or drop us a message. We are more than happy to help.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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