20 March 2024
If you are covering the latest government house price index, please see the following comment from Charlotte Nixon, mortgage expert at Quilter:
"There has been another small 0.6% decrease in UK house prices according to the latest government house price index.
"This is at odds to other indices which have shown house prices are now back on an upward trajectory showing that measuring the nation’s average house price and what is happening on the ground at any one time is not a fine art.
"What is clear though is the market has been notably quiet in recent months, and while we have certainly seen that apply downward pressure to prices it hasn’t so far translated into the crash that some were predicting when mortgage rates soared from their low levels.
"With inflation now under 4%, the murmurs of an interest rate cut will become louder as we head through the year. This will in turn help to reduce mortgage rates encouraging more buyers, perhaps scared off over the past couple of years, to start looking again.
"However, the chaos of mortgage rates in 2023 has put many would be buyers off. The mortgage market has suffered from incredible unpredictability with rates rising and falling rapidly and deals here today are gone tomorrow. This really tests buyer affordability and their ability to ride out uncertainty. Just recently rates have been on an upward trajectory again but whether this morning’s inflation figure changes this, only time will tell.
"These higher rates are having a real world impact that may result in further drops in house prices. According to consumer site Which?, missed payment rates among mortgage holders have returned to levels seen at the height of the cost of living crisis.
"In the month to March 8th, 8.1 per cent of mortgage holders missed essential payments such as housing, utility bill, credit card or loan payments. This could end up causing people to put their houses on the market as they simply can’t afford to keep up with payments. If a glut of houses turn up on the market with little demand then this could apply further pressure on house prices.
"Another period of more predictable rates for buyers coupled with a more optimistic outlook will help sellers feel confident they can get the deal they want for their property. Whichever way you look at it though the market is incredibly sensitive to the macro-economic data coming out at present and both buyers and sellers must feel prepared to negotiate on asking prices in either direction."
