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House prices drop in April but ‘regional differences’ emerge ‒ Halifax

  • 09/05/2023
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House prices drop in April but ‘regional differences’ emerge ‒ Halifax
The average house price dropped by 0.3 per cent in April, the latest house price index from Halifax has revealed.

It follows a 0.8 per cent increase in March, and means that the annual rate of house price growth has slowed from 1.6 per cent to 0.1%.

As a result, the average property is now worth £286,896.

Growing regional variations

Halifax suggested there was an “increasingly mixed picture” for house prices across the different regions of the UK.

For example, the four regions of southern England have seen average house prices fall over the last 12 months, with the biggest dip taking place in the South East, where prices have fallen 0.6 per cent.

The lender noted that these regions tend to have the most expensive average purchase price, meaning that buyers here have seen the biggest impact from higher borrowing costs.

All other regions of the UK saw positive annual price growth in the 12 months to April, most notably in the West Midlands where prices rose 3.1 per cent. 

More downward pressure on house prices to come

Kim Kinnaird, director of Halifax Mortgages, noted that April’s fall came after three straight months of price rises, with the typical house price now around £28,000 higher in cash terms than two years ago.

She added: “Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.”

Kinnaird warned that cost of living concerns remain significant, and may act as a brake on activity. 

“Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over the course of this year,” she concluded. 

A boost to buyers

Mark Harris, chief executive of SPF Private Clients noted that a rise in swap rates had led to lenders pulling their best lower loan-to-value products, and repricing them around 30 basis points higher.

He continued: “However, swaps have since plateaued and have been edging downwards again so if this trend continues, we expect to see a return of five-year fixes at sub-4 per cent, which will be a boost to buyers.”

“First-time buyer numbers continue to prove resilient and with lenders returning to higher loan-to-value products, this will assist those struggling to get on the housing ladder.”

‘Fog of uncertainty’ is clearing

Jonathan Hopper, CEO of Garrington Property Finders, said that the ”fog of uncertainty” around the housing market was starting to clear, with buyers starting to “come out of the woodwork”.

He continued: “Sentiment is improving steadily, and the mood among many buyers has shifted from anxiety to cautious confidence. While everyone is still wary of overpaying, committed buyers are focusing less on how prices might move in the next month or two and more on how to use their strong hand to secure a sizeable discount now.”

Hopper noted that while further base rate rises would make affordability more challenging for first-time buyers, those with equity already under their belts will see now as a good time to buy.

Rosier picture

Carl Howard, group CEO at Andrews Estate aAents, said that there is currently a “much rosier picture” than the housing market last Autumn.

He suggested that fears of a sustained slump have been dispelled, with the signs that the spring will be “increasingly busy”.

Howard continued: “Sellers are also willing to be flexible with house prices, which is generating more activity and pushing more sales over the line.

“For prospective first-time buyers hoping for a slump, the market’s resilience may not come as welcome news, particularly while inflation remains stubbornly high. Many will still be putting their property searches on hold to see how the economy springs back.” 

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