UK

House prices rose 0.1% in April amid higher mortgage costs

house prices rise

It left the average cost of a home at £288,949, which was 1.1% higher than a year earlier

UK house prices stagnated in April, according to Halifax, adding to evidence of a property market facing headwinds from increasing mortgage rates.

They rose just 0.1% after a 0.9% decline in March, the mortgage lender said in a report on Tuesday. It left the average cost of a home at £288,949, which was 1.1% higher than a year earlier.

The figures come a week after rival lender Nationwide Building Society reported a second monthly drop in prices. Together, they suggest would-be buyers are feeling the pinch from costlier home loans as investors pare back bets on how far the BoE will cut interest rates.

This reflects a housing market finding its feet in an era of higher interest rates, said Amanda Bryden, head of mortgages at Halifax. We cannot overlook the fact that affordability constraints are still a considerable challenge, for both new buyers and those rolling off fixed-term deals.

Halifax expects property prices to “rise modestly over the course of 2024”.

The housing market had been showing signs of recovery after a slump last year sparked by a cost-of-living crisis and recession. But doubts are now emerging after lenders, including NatWest, Santander and Nationwide, raised mortgage rates in response to rising swap rates, which are used to set the bulk of mortgage products.

With house prices still historically high, the plight facing “generation rent” is set to feature at a general election expected later this year. The opposition Labour Party appears on track to return to power after Prime Minister Rishi Sunak’s Conservatives suffered devastating losses in local elections last week.

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