UK House Prices: A Glimmer of Hope Amidst the Doldrums

The latest figures from Halifax have revealed that UK house prices have remained subdued for the third consecutive month, with the average house price standing at £288,455 in June. While this may seem like more of the same, there are some positive signs on the horizon that could spell good news for buyers and borrowers alike.

Mortgage rates are on the decline

The Halifax report highlights that mortgage affordability remains the biggest challenge for new homebuyers, as well as those coming to the end of their deals. However, with the prospect of the Bank of England cutting interest rates in August or September, several mortgage lenders have already begun to lower their rates. This week, Barclays announced a 0.27 percentage point cut on some of its fixed-rate mortgages, while Halifax and Santander also reduced their rates.

House prices remain subdued

According to Amanda Bryden, the Halifax’s head of mortgages, house prices have posted a seventh consecutive month of year-on-year growth. However, she notes that the market remains subdued, with the shortage of available properties keeping prices high.

Mortgage brokers are optimistic about the future

Mark Harris, the chief executive of the mortgage broker SPF Private Clients, is optimistic about the future. He believes that lenders who haven’t yet repriced their mortgages will follow suit, which will be welcome news for hard-pressed borrowers.

The Impact on First-Time Buyers

Analysis by Rightmove published last month found that monthly mortgage costs for first-time buyers had increased by more than 60% since the 2019 general election. This is a concerning trend, and one that highlights the need for more affordable options for those looking to get on the property ladder.

First-time buyers are struggling to get on the ladder

However, Bryden believes that mortgage costs will ease gradually through a combination of lower interest rates, rising incomes, and more restrained growth in house prices.

Regional Variations

London continues to have the most expensive property in the country, with the average home in the capital costing £536,306, up 0.9% in June on a year earlier. The south-east of England was the second most expensive area, with the average house price at £385,056, while the north-east was the least expensive, with the average property costing £172,308.

Regional house prices vary wildly

The highest property price growth in the UK was in Northern Ireland, with properties costing £192,457 on average, a 4% increase on an annual basis.

Looking to the Future

While the housing market is delicately balanced and sensitive to the pace of change to the base rate, Bryden expects property prices to rise modestly through the rest of this year and into 2025.

House prices are expected to rise modestly

In conclusion, while the UK housing market is still facing challenges, there are some positive signs on the horizon. With mortgage rates on the decline and lenders competing for business, it’s an opportune time for buyers and borrowers to take advantage of the situation.