UK house prices fall for first time in 6 months as rates stay high
Reuters
Published Apr 05, 2024 02:06AM ET
Updated Apr 05, 2024 03:01AM ET
By David Milliken
LONDON (Reuters) - British house prices fell 1.0% in March, their first drop since September 2023, figures from mortgage lender Halifax showed on Friday, contrasting with the more upbeat picture from other housing data earlier in the week.
Halifax, part of Lloyds Banking Group (LON:LLOY), Britain's largest mortgage lender, said the drop was not entirely unexpected after price rises in the previous five months and continued high interest rates.
But it leaves prices just 0.3% higher than a year earlier - below both the median forecast for a 1.45% rise in a Reuters poll of economists and the 1.6% increase reported on Tuesday by Nationwide, Britain's second-largest mortgage lender.
In recent months, activity in Britain's housing market has been recovering after a slump in late 2022 when Liz Truss' brief term as prime minister roiled financial markets and the Bank of England raised interest rates more sharply.
BoE data on Tuesday showed that February had the highest number of mortgage approvals since September 2022, as wage growth began to outpace inflation and BoE rate cuts became a more concrete possibility.
However, Halifax director Kim Kinnaird said financial markets had become less optimistic about the degree and timing of rate cuts due to stickiness in some underlying inflation measures.
"This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year," she said.
Investors currently expect the BoE to start cutting rates in June or August, and for rates to fall to around 4.5% by the end of the year from 5.25% now.
Imogen Pattison, an economist at consultants Capital Economics, said Halifax's house price data tended to be more sensitive to movements in interest rates than Nationwide's.
"Looking ahead, we expect mortgage rates to remain higher than in January and February and hover at just under 5% over the coming months, which will subdue demand and prevent further gains in house prices," she said.
House prices are still around 20% above their level before the COVID-19 pandemic - mirroring big rises seen in many other advanced economies - after moving in a fairly narrow range since the spring of 2022, Halifax said.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.