House prices return to growth in April - Halifax

UK house prices returned to growth in April, with the housing market "finding its feet in an era of higher interest rates", according to data released on Tuesday by Halifax.

Average house prices rose 0.1% on the month following a 0.9% decline in March.

On the year, house prices increased 1.1% in April following a 0.4% jump the month before.

The figures showed that a typical UK home now costs £288,949 compared to £288,781 in March.

Amanda Bryden, head of mortgages at Halifax, said the reality is that average house prices have largely plateaued in the early part of 2024.

"This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months," she said.

"Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.

"However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals. Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts."

Bryden said that if the Bank of England cuts rates later this year, as expected, fixed mortgage rates should fall. This, combined with the resilience displayed by the housing market over recent months, means Halifax now expects property prices to rise modestly over the course of this year.

Peter Arnold, UK chief economist at EY ITEM Club, said: "There is growing evidence that the housing market has passed the bottom. The substantial fall in mortgage rates since last summer, combined with strong growth in nominal wages, has reduced the scale of the mortgage affordability problem. This has helped to entice some buyers back to the market, leading to a recovery in transactions and putting a floor under prices.

"More recently, mortgage rates have begun to edge up again in response to rising swap rates, as financial markets anticipate a slower pace of Bank of England rate cuts. This is likely to constrain the pace of the recovery in transactions and prices in the near-term. But so far, the increases have been small and mortgage rates remain well below last summer’s peaks. Therefore, the EY ITEM Club does not expect to see a renewed downturn in the housing market."