19 June 2024
If you are covering the latest UK house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“According to the most recent Government House Price Index UK, house prices increased 1.1% in the 12 months to April 2024, up from an increase of 0.9% in the 12 months to March 2024. The average UK house price now stands at £281,000 in April 2024 which is £3,000 higher than 12 months ago.
“The housing market remains anything but predictable amid challenging economic conditions. Whether the news this morning that inflation has returned to the Bank of England’s target of 2% will help steady the housing market is yet to be seen.
“It’s important to remember that lower inflation does not mean that prices have dropped; they are simply rising at a slower rate, and people are still being battered by high mortgage rates coupled with high living costs. This has served to temper any significant house price rises, as people are less likely to offer above asking prices given how stretched they are. To add to this, mortgage rates have been volatile, often pulling the rug from under buyers’ feet as they come to make an offer due to a sudden increase in the cost of servicing the mortgage.
“If we get the sense from tomorrow’s Bank of England interest rate decision that a base rate cut is still a while off, it is unlikely that house prices are going to significantly inflate any time soon. However, once rates are cut and mortgage rates do come down as a result, we may find that pent-up demand from people waiting for this moment exerts upward pressure on house prices.
“The next government will want a vibrant housing market but not one where prices continue to outstrip wages. Pledges to build a significant number of new homes by Labour would help to add housing stock to a market suffering from a severe lack of it. Without the building of a significant number of new homes, the laws of supply and demand mean house prices will continue on their upward trajectory, making the dream of homeownership a constantly moving target for millions of young people in this country.”
