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House prices plateau but increases still forecast

Research from the UK’s biggest mortgage lender has revealed the price of properties are falling, but they could creep back up once interest rates drop.

Halifax’s house price index has found that average house prices rose by 0.1% in April after falling 0.9% in March.

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According to the figures, a typical UK home costs £288,949 just slightly up compared to £288,781 last month.

Amanda Bryden, head of mortgages at Halifax, said: ‘The reality is that average house prices have largely plateaued in the early part of 2024.

‘This reflects a housing market finding its feet in an era of higher interest rates.’

However, the speculation around interest rates falling soon has begun. The rate-setters at the Bank of England are expected to keep rates at 5.25% when they meet on Thursday in a bid to keep inflation down, but Bryden has claimed rates will begin reducing later on in the year.

‘If, as is still expected, downward moves in Bank rate come into play later this year, fixed mortgage rates should fall, ’Bryden said. ‘Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024.’

Although, focusing back on current events, the new figures from Halifax display that as the housing market grows accustomed to higher borrowing costs, there’s been an increase in demand for flats and smaller homes.

Against this backdrop, Daniel Austin, CEO and co-founder at ASK Partners, said: ‘The property sector is in recovery mode. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential.

‘In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value. Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.’

As well as Austin expressing his concerns about people favouring location when it comes to buying a house, he also explains that the next government must prioritise the current housing crisis to help people in the UK.

Austin added: ‘A RICS survey uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns.

‘With housing set to be a battleground point in this year’s election and as the sector moves to the top of the agenda for all parties, we hope to see a long-term plan for new homes, including social housing, however, we expect we will see more short-term fixes.

‘Stimulus will be welcome but can create unnecessary froth. For voters, a stamp duty holiday or reprieve may be a welcome sign. For developers, eased planning regulations for brownfield sites and conversions will be popular.’

Image: satheeshsankaran

More on this topic:

Lenders increase mortgage rates as house prices drop

Ramped up rural house prices are forcing locals into renting

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