Created 17th April 2023

Rising house prices show the UK’s housing market remains strong despite economic uncertainty, says Matt Hoy, Managing Director - Residential at Bradley Hall.

Lower mortgage rates and the UK’s strong labour market saw the average house price increase by 0.8% in March, according to the latest Halifax House Price Index.

The rise, which follows a 1.2% rise in February, means the average UK house price now stands at £287,880, just 2% below the market peak reached last August.

A number of factors have contributed to this, not least the lack of available supply and scarcity of new developments, but the key factors are undoubtedly the recent fall in mortgage rates and the nation’s strong labour market.

During the last quarter of 2022, increased borrowing saw mortgage rates reach new highs, however a reversal of this trend over recent months has led to rates easing significantly, with the typical 5-year fixed rate deal now down by over 100 points on November.

This has made it easier and more affordable for homeowners to finance the purchase of their dream property. When mortgage rates are low, people are more likely to be able to afford to buy, which naturally increases demand. Such pent-up demand also drives up prices, building a much more resilient market.

The UK’s strong labour market has also played a significant role in the market’s resurgence, despite the cost-of-living crisis engulfing us. When there are plenty of job opportunities and low unemployment, it pushes up average wages and income growth and provides potential buyers with the financial stability to complete their purchase.

This is not to say the market doesn’t have its challenges, by any stretch. As mentioned earlier, the lack of supply and the slowing of developments will no doubt cause further strain to stock levels and cause further fluctuations, but there are certainly plenty of reasons to be optimistic about the future.

Despite the many headwinds facing the sector, the market has continued to stand firm and with the annual rate of house price growth now standing at 2.1% for the third consecutive month, it’s painting a positive picture for the market ahead of the ‘spring bounce’ typically associated with the post-Easter period.

The frenzied post-coronavirus market conditions fuelled by the Stamp Duty holiday, which as expected have proven wholly unsustainable, now also seem to have eased with prices settling rather than sliding.

And with improved market conditions set to continue, we can expect to see homeowners continue to buy, resulting in prices holding firm and leaving buyers, sellers and developers alike with plenty of reasons to be positive as we look to the future.

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