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UK house prices grew at an annual rate of 1.2 per cent in February
Mar 5, 2024
UK house prices grew at an annual rate of 1.2 per cent in February Edinburgh
By   Internet
  • City News
  • UK housing market
  • UK house prices
  • housing market rebound
Abstract: Recent data reveals that UK house prices experienced a year-on-year growth rate of 1.2% in February, marking the first time in over a year. This signals a resurgence in the UK real estate market, with this revival likely driven by the decrease in borrowing costs.

According to Nationwide's House Price Index, adjusted for seasonal influences, house prices have dropped by approximately 3% compared to the peak reached in the summer of 2022.


However, the decrease in borrowing costs at the beginning of this year appears to have injected new vitality into the real estate market. Industry data indeed shows a significant increase in mortgage applications at the beginning of this year, and surveyors have also reported a rise in inquiries from new homebuyers.


Nevertheless, despite the current positive growth in house prices, short-term prospects remain uncertain. One reason is the unclear future trend of interest rates. Swap rates, which serve as the pricing basis for fixed-rate mortgages, have rebounded after experiencing a sharp decline at the end of December last year.


UK house prices grew at an annual rate of 1.2 per cent in February

propertywire


While borrowing costs are still far below the high point of last summer, if the recent upward trend continues, it may exert a certain restraining effect on the pace of the real estate market's recovery.


However, it is also important to recognize that pressure on UK household budgets is gradually easing. Currently, wage growth has exceeded the inflation rate, providing families with increased purchasing power. However, it will take time to make up for the losses of the past few years, especially considering that consumer confidence remains fragile.


Meanwhile, mortgage rates remain relatively high, and the swap rates, which serve as the pricing basis, have also risen over the past month. However, homebuyers generally believe that there is only room for the base rate to be cut, leading to increased demand and house prices in recent months. It is expected that as inflation is brought under control, interest rates will eventually decrease this year, further supporting UK house prices to maintain an annual positive growth rate of 3% in 2024.

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UK house prices grew at an annual rate of 1.2 per cent in February
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