UK House Prices reach Highest Surge since December 2022

A survey has revealed that UK house prices rose in March 2024 at their fastest annual pace since December 2022.

This has added to signs that the squeeze from high-interest rates is continuing to ease.

Nationwide Building Society, Britain’s second-largest mortgage lender, said house prices were 1.6% higher in March from a year earlier at an average of £261,142, picking up from annual growth of 1.2% in February.

The acceleration came despite a 0.2% price fall in March alone, the first drop since December 2023 after a 0.7% increase a month earlier.

Nationwide economist Robert Gardner said:

“Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards.

“For example, the number of mortgages approved for house purchase in January was about 15% below pre-pandemic levels.

“This largely reflects the impact of higher interest rates on affordability.”

With house prices rising more slowly than wages, affordability constraints are gradually easing, he added.

Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, predicted a 4% rise in house prices for 2024.

He said: “Forward-looking indicators continue to suggest house prices will keep rising as mortgage rates gradually tick down.”

UK house prices increased more than 20% between the start of the Covid-19 pandemic and late 2022.

But they then fell slightly as home sales were curbed by bond market turmoil during Liz Truss’ brief tenure as Prime Minister and a sharp rise in interest rates.

The Bank of England increased its main interest rate to 5.25% in August 2023, its highest since 2008.

Financial markets see a first cut in June or August, with rates forecast to drop to around 4.5% by the end of the year, lowering the cost of new mortgages.

Figures showed that mortgage lenders approved the highest number of mortgages since September 2022 in February, although the latest reading of 60,383 is still about 10% below its pre-covid average.

The average interest rate on new mortgages fell by 0.29 percentage points in February to a six-month low of 4.90%.

Nationwide said that across the first quarter as a whole, house prices were 1.1% higher than the previous quarter, the fastest three-month rise since the three months to July 2022.

The biggest rise over the past year was in Northern Ireland, where prices rose 4.6%, while the largest fall was in southwest England where prices fell 1.7%. Prices in London increased by 1.6%.