By Wasana Nadeeshani Sellahewa
(Commonwealth)_ This consistent upward trend in the UK housing market during February reflects the ongoing resilience and momentum within the real estate sector. The 0.4% increase in average house prices for the fifth consecutive month underscores sustained buyer interest and market activity. On an annual basis, the 1.7% growth rate, while marginally lower than the previous month’s figure of 2.3%, still signifies a positive trajectory in the overall market performance. The housing landscape continues to demonstrate stability and adaptability, with buyers actively participating in the market. The average UK house price, reaching £291,699 in February, marks a notable £1,000 increment from the preceding month. This uptick in average prices indicates the ongoing demand and competitive nature of the housing market, contributing to the overall positive sentiment in the industry.
In essence, the February performance of the UK housing market not only signifies a continuation of positive trends but also emphasizes the need for stakeholders to remain vigilant and responsive to evolving conditions. The delicate balance between market growth and the challenges at play requires a comprehensive and adaptive approach to ensure the long-term stability and vitality of the real estate sector. Kim Kinnaird, Director of Halifax Mortgages, commented on these figures, suggesting a relatively stable start to 2024. These numbers align with other positive indicators, including increased housing activity and mortgage approvals. Kinnaird noted that the average home price is now only approximately £1,800 shy of the peak witnessed in June 2022. However, she highlighted the uncertainty ahead, pointing out potential challenges despite lower mortgage rates and anticipated Bank of England interest rate cuts in the coming year.
The Budget announcement by Chancellor Jeremy Hunt included property tax measures, such as a reduction in the higher rate of capital gains tax for residential properties from 28% to 24% starting April 2024. The aim is to encourage landlords and second homeowners to sell their properties, potentially diversifying the market and aiding those aspiring to step onto the property ladder. Amy Reynolds, Head of Sales at London-based estate agent Antony Roberts, remarked on the market’s increasing momentum, especially after a relatively quiet 2023. She noted a flow of committed buyers and a robust pipeline of serious applicants, anticipating a busy spring market. Nicky Stevenson, Managing Director at estate agent group Fine & Country, expressed curiosity about whether the Chancellor’s capital gains tax cut would prompt landlords to sell, potentially injecting more energy into the housing market and revitalizing demand from first-time buyers facing challenges in the high-interest rate environment.
Tom Bill, Head of UK Residential Research at estate agent Knight Frank, provided insights into financial market expectations, suggesting fewer rate cuts in the near future due to stubborn wage growth. Despite this, he anticipated increased transactions compared to the previous year, with a projected 3% rise in prices. Bill emphasized the importance of realistic asking prices, particularly considering the recent months of weaker inflation signals. He highlighted the regional breakdown, indicating that affordability remains a significant constraint on the market, with areas offering better value experiencing stronger price growth over the past year. Nathan Emerson, Chief Executive of property professionals’ body, advocated for the reduction of interest rates by the Bank of England. He suggested that lowering interest rates could persuade more people to sell their homes, thereby easing borrowing costs for prospective homeowners.
The UK housing market remains robust, characterized by sustained monthly price growth. Despite encouraging factors such as government interventions and heightened market engagement, persistent challenges like affordability limitations and the looming influence of interest rates on borrowing expenses necessitate continued vigilance and strategic planning in response to the dynamic shifts within the real estate environment.
