The latest Halifax House Price Index reports a small monthly increase of +0.1% and an annual change of +1.1%. This indicates ongoing resilience in the housing market despite the ongoing challenges.
Amanda Bryden, head of mortgages at Halifax said “This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. “
She did go on to say “However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals.
The latest Nationwide HPI report started with the headline – ‘April sees slowing in annual house price growth’
It reported that the monthly change actually went down by -0.4% compared to March and the annual change had slowed to +0.6% from +1.6%.
Robert Gardner, Nationwide’s Chief Economist said “The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year. House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”
The latest Hometrack House report, which breaks prices down into regions, reported an annual change of -0.2%.
This is unchanged from it’s previous report, but is does go on to say that ‘sales volumes are up 12% year on year’
Following on from this, the latest Rightmove report, which focuses on asking prices, reported a monthly increase of +1.1%. It stated “A key factor behind this growth towards a near-record average prices is the largest homes, top-of-the-ladder sector”
To balance this, It did go on to say “However, the market remains price-sensitive, and operating at different speeds, with prices and activity rising more slowly in the more mortgage dependent first-time buyer and second-stepper sectors”
Our Thoughts
From the activity we’ve seen for purchase transactions, it’s not surprising that these reports indicate a rather flat market in terms of house prices this year, albeit with a slight lean towards the upside.
We’ve faced many challenges over the last 18-24 months and just when it feels like a ‘new normal’, another challenge presents itself.
Very recently, this has been an increase in mortgage rates and tighter affordability assessments from lenders.
This results in a slow down in activity from borrowers who are sensitive to costs, not 100% motivated to move or need to maximise what they can borrow.
To be clear, there are still relatively good activity levels and nothing has ground to a halt. However, there is not doubt that these things do have a noticeable impact on activity in the purchase sector.
The foundations are set for mortgage rates to reduce later in the year and if this happens, we would expect affordability to ease. However, as we know, things can change quickly so we will continue to adapt to an ever changing market.
