House prices in the U.K. fail to rebound during the spring season due to elevated mortgage rates, as reported in Halifax.
London continues to hold the title of the most expensive property market in the UK, with an average house price of £536,306. This figure is significantly higher than the national average of £288,455.
Despite initial forecasts predicting a 3% annual drop, Savills has revised its prediction, suggesting a 2.5% rise instead. However, most analysts remain cautious, anticipating that average house prices will either remain flat or experience a marginal decline due to high inflation and reduced purchasing power.
Estate agent Knight Frank has also revised its forecasts, now predicting average growth of 3% for the year. Yet, it's worth noting that there is no available information about any economic researcher revising their growth forecast for the UK real estate market to 3% annual growth for 2023.
The latest Halifax House Price Index shows a monthly decrease of 0.2% in average house prices. Contrastingly, in England, the North West has seen the steepest rate of house price inflation, up by 3.8% over the past year. Northern Ireland, on the other hand, has recorded the strongest property price growth of any nation or region in the UK, rising by 4% on an annual basis. House prices rose on an annual basis across all UK regions during June, except for in East England where they fell 0.9%.
Borrowers are keeping a close eye on the expected interest rate cut from the Bank of England in the coming months, which could potentially stimulate activity in the property market. The general election could be a contributing factor to the current lower activity in the property market. However, Nicky Stevenson, managing director at national estate agent group Fine & Country, suggests that the market will get more busy now that the election is out of the way.
Tom Bill, head of UK residential research at Knight Frank, attributes the lack of a strong seasonal bounce in the housing market this spring to stubbornly-high mortgage rates and the uncertainty of a general election. The Labour party's general election win could provide more certainty to the market, potentially pushing prices back up if demand rises.
Annual house price forecasts are more positive than they were at the beginning of the year, according to Nicky Stevenson. Zoopla is predicting growth of 1.5% in property prices, and Halifax now predicts modest property price growth for the rest of the year. Despite this, house prices have only risen by just 0.4% so far this year, according to Amanda Bryden, head of mortgages for Halifax.
Labour has pledged to build 1.5 million homes over the next five years. The party has also promised a Freedom to Buy scheme for new buyers but plans to reduce the first-time buyer stamp duty threshold from £425,000 to £300,000. These measures could potentially impact the housing market in the coming years.
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