Improving market doesn’t solve underlying problems - Propertymark

Promising figures from the latest house price index doesn’t mean underlying problems in the market have been solved, warns Propertymark.

UK house prices fell by 0.2% in March. Nevertheless, the annual rate of house price growth edged higher to 1.6% in March, from 1.2% in February. The figures come from the Nationwide.

Nathan Emerson, CEO of Propertymark, comments: “Sellers have every reason to start feeling positive about putting their home up for sale and being able to go on to buy their next perfect property. 

“2024 has shown a positive trend that house prices are growing once again following three years of economic turbulence. However the UK Government must look to make houses equally affordable for buyers and that can only be done by building more houses.”

Robert Gardner, chief economist of the Nationwide, says: “Activity has picked up from the weak levels prevailing towards the end of 2023 but remain relatively subdued by historic standards. For example, the number of mortgages approved for house purchase in January was around 15% below pre-pandemic levels. 

“This largely reflects the impact of higher interest rates on affordability. While mortgage rates are below the peaks seen in mid-2023, they remain well above the lows prevailing in the wake of the pandemic

“With cost-of-living pressures easing as inflation moves back towards target, consumer sentiment is improving. Indeed, surveyors report a pickup in new buyer enquiries and new instructions to sell in recent months. 

“Moreover, with income growth continuing to outpace house price growth by a healthy margin, housing affordability is improving, albeit gradually.

“If these trends are maintained, activity is likely to gain momentum, though the pace of the recovery is still likely to be heavily influenced by the trajectory of interest rates.”

However Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, says: “We’re still a long way from the kind of bounce sellers were hoping for in the spring. Mortgage approval levels are still around 15% lower than before the pandemic. 

“When you consider how many new For Sale signs have been going up around the country, it means sellers may still struggle to shift their properties. Zoopla figures out last week showed that the stock of properties is up by a fifth, and they’re accepting an average discount of £10,000.

“Meanwhile, mortgage rates are still rising. According to Moneyfacts, at the end of February, the average  two-year rate was 5.75% and by the end of March it was 5.8%. This is hardly a spectacular ascent, but means anyone who was waiting for better rates to emerge will still be sitting on their hands.”