Market Activity and Mortgage Trends
As we transition into spring, the UK property market continues to navigate through shifting dynamics. Recent data from Nationwide reveals a slight dip of 0.2% in house prices for March, yet annual growth has risen to 1.6%. Regions such as the North East and North West saw the most significant growth in the first quarter of 2024.
The surge in market activity witnessed since the beginning of the year is beginning to stabilise. Stimulated by cuts to mortgage rates, mortgage approvals in February reached their highest level in 17 months, falling just 7% below the 2017-19 average. However, as mortgage rates return to late December levels, it’s unlikely that this heightened activity will persist into March. A decrease in the number of sales agreed has been reported which is down from February’s peak, indicating a potential slowdown in market momentum.
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Regional Performance and Future Outlook
Although the number of completed transactions showed a slight rise in February, it remains subdued, reflecting a cautious approach among buyers due to affordability constraints. Despite increased market sentiment, affordability concerns persist, with higher mortgage rates tempering demand. The recent surge in sellers has contributed to rising stock levels, yet the balance between supply and demand is shifting, which could impact price growth moving forward.
According to the Register of Scotland, data reveals varied performance across regions. While Scotland boasts positive annual growth to December 2023, other areas like the South East and East of England experienced notable price falls, particularly in rural hotspots that previously saw robust growth during the pandemic.
The anticipation of the first base rate cut looms closer as the labour market and inflation expectations stabilise. Despite inflation undershooting expectations, concerns remain regarding high wage growth and the impending increase to the minimum wage on April 1st. However, recent months have seen a slowdown in wage growth, prompting speculation about the timing of the first rate cut, with some forecasts suggesting June as a potential timeframe.
Meanwhile, annual rental growth across the UK saw a marginal decline in February, yet regional disparities persist, with strong growth observed in Scotland, the North East, and Wales. This nuanced landscape underscores the ongoing evolution of the UK property market, influenced by many factors including economic conditions, policy changes, and shifting consumer preferences.
