The Nationwide House Price Index released this morning has revealed that house prices grew by 0.4% month on month in May.
Following on from this news, industry experts from around the country have shared their thoughts with IFA Magazine.
Michelle Stevens, mortgage expert at personal finance comparison site finder.com said: “A lot of uncertainty still surrounds the UK housing market, but today’s figures show that buyer demand is strengthening. The Bank of England is widely predicted to cut rates in the coming months, and as a result buyers who have so far held off are beginning to return to the market. However, despite inflation falling to the lowest rate since September 2021 last month, it’s important to remember that many households are still struggling to make ends meet, and therefore affordability issues remain. Because of this, it’s unlikely that we’ll see UK house prices sprint away in 2024, but there are encouraging signs of recovery.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “House prices had been yo-yoing from economic gales, but May’s figures indicate calmer waters ahead for the housing market. Previously hesitant home buyers are feeling more confident to pull the trigger on moving plans as financial strains ease.
“With inflation moving closer to the government’s 2% target and potential interest rate cuts this summer, demand may surge further into 2024. This will help to stabilise or even nudge prices upwards amid buyer competition – a positive development for sellers.
“Lenders are also lowering rates in response to more favourable conditions, making homeownership more attainable, especially for first-time buyers previously deterred by high monthly payments or excessively long mortgage terms.
“If current trends persist, the UK housing market could experience a steady rebound, with prices rising moderately in popular areas and hot markets. However, affordability concerns may linger, particularly for those on lower incomes or in regions with high living costs.”
Matt Thompson, head of sales at Chestertons, says: “Some house hunters waited for the Bank of England to cut interest rates earlier this month but as this did not happen, buyers quickly resumed their search. Although the announcement of the General Election caught most people by surprise, it was positive news and caused minimum disruption to the property market at the time – particularly in London where demand continues to outstrip supply. We expect the increased certainty of the political landscape to support confidence in the market and encourage more house hunters to make decision. We therefore expect buyer demand to remain strong throughout the summer.”
Karen Noye, mortgage expert at Quilter: “The housing market continues to demonstrate its considerable resilience in the face of tough economic conditions, with Nationwide reporting a 0.4% rise in house prices for May, following a period of subdued growth. This is likely in part due to the annual spring bounce as more buyers come to market making it more competitive. However, on an annual basis, prices have increased by 1.3% .The slight uptick suggests some stability, albeit under challenging conditions.
“Nationwide’s data reflects a modestly positive trend, but the housing market remains very unpredictable and the growth in house prices is modest. Monthly property transactions have been lower than expected, indicating a cautious market but this is no surprise given the stress the nation’s finances have been under.
“Affordability remains a significant challenge, particularly for first-time buyers who face rising mortgage rates and the ongoing pressures of living costs. The dearth of these buyers makes it tricky for the market to operate due to incomplete chains. The volatility of mortgage rates driven by expectations of a longer period before interest rate cuts by the Bank of England, continues to dampen market activity. This environment makes it harder for new buyers to save for deposits and secure affordable mortgage deals. Whether the election adds another layer of unpredictability for buyers is yet to be seen but it is unlikely that this will change too many homebuying plans. The broader economic factors such as interest and continued lower inflation are more likely to influence buying decisions in the short term. Current prime minister Rishi Sunak is setting himself up as the candidate to bring lower interest rates but the reality is we are already on that trajectory given the recent inflation print. However, it is one area where he can play to a younger voter base after courting the grey vote with the promise never to tax state pensions.
“Attention now turns to the Bank of England’s upcoming monetary policy decision and what it intonates as a plan for the rest of the year. While no immediate changes in interest rates are expected, a future cut could provide a much-needed boost to the housing market. Lower borrowing costs would likely stimulate demand, as many prospective buyers are currently waiting for more favourable conditions.”
