UK House Prices Rise Amidst Two-Year Low in Mortgage Approvals
Nationwide reports steady growth in property values despite a sharp decline in remortgaging and ongoing geopolitical volatility.
Image: Matt Weston / AI
Callum Smith
UK house prices rose by 0.3% in February, defying a slump in mortgage approvals that hit a two-year low as the market grapples with shifting interest rate expectations.
Existing homeowners maintain a cautious stance. They confront a rapidly evolving interest rate environment that dictates the pace of movement.
Nationwide Building Society defined this price growth as steady. The lender projects a tangible pickup in market activity as affordability trends stabilize.
The annual growth rate for consumer credit held firm at 8.3 per cent in January. Household spending power remains durable against broader economic headwinds.
Robert Gardner, Nationwide’s chief economist, stated that housing market activity is likely to recover in the coming quarters. This forecast depends on the maintenance of the improving affordability trend witnessed throughout the previous year.
Buyers and sellers proceed with greater clarity as the economic fog lifts.
Current activity levels follow a period where mortgage approvals for house purchases remained near pre-pandemic levels. This indicates a return to historical norms rather than the volatile fluctuations of recent years.
Tom Bill, head of UK residential research at Knight Frank, described recent activity as solid but unspectacular. Demand will likely strengthen if mortgage rates continue their downward trajectory.
Jason Tebb, President of OnTheMarket, tracked a continued pickup in activity and sentiment this year. Buyers and sellers proceed with greater clarity as the economic fog lifts.
Tebb confirmed that last year’s rate reductions increased transaction volumes. Further cuts this year would drive transactions across the entire property spectrum.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, identified a surge of sellers listing homes as a primary driver of the rebound. Market inventory sits 6 per cent higher than one year ago.
This volume offers a level of choice not seen since the post-pandemic rush. Haine noted that UK inflation is expected to hit the Bank of England’s 2% target by April.
A drop to that target would trigger significant movement within the housing sector. However, Jeremy Leaf, a north London estate agent, stated that buyers remain nervous despite these expectations.
The physical reality on the ground remains one of hesitation. Participants weigh the immediate cost of borrowing against future projections.
Leaf observed that the abundance of choice, particularly regarding flats, draws more first-time buyers into the market. This availability creates an entry point for those previously priced out of the urban landscape.
Justin Moy, managing director at EHF Mortgages, reported that first-time buyers are increasingly ignoring leasehold properties to move higher up the ladder. Consequently, landlords are purchasing these overlooked flats at significantly reduced prices.
Nathan Emerson, chief executive of Propertymark, confirmed that member agents see strong interest in well-priced homes. Serious participants act quickly when valuations align with current market realities.
Mark Harris, chief executive of mortgage broker SPF Private Clients, argued that another cut in the Bank of England base rate would provide a welcome boost. This intervention would arrive as the market enters the traditionally busier spring season.
While geopolitical uncertainties could influence inflation, the broader trajectory points toward easing monetary policy. The market is currently braced for this transition.
Iain McKenzie, chief executive of The Guild of Property Professionals, noted that while geopolitical uncertainties could influence inflation, the broader trajectory points toward easing monetary policy. The market is currently braced for this transition.
Andrew Montlake, CEO at Coreco, acknowledged the slight rise in February prices but issued a stern warning. He cautioned that the trend could turn quickly following recent escalations in the Middle East.
Babek Ismayil, CEO at OneDome, stated that inflation could rise again due to the ongoing Middle East crisis. Such a spike would potentially stall the recovery of the housing sector before it gains full momentum.
Emma Jones, managing director at Whenthebanksaysno.co.uk, said falling inflation is no longer a guarantee if oil prices soar. This volatility could jeopardize a planned rate cut by the Bank of England, keeping borrowing costs elevated.
Ian Futcher, a financial planner at Quilter, suggested that a marked uplift in house prices is unlikely to occur in the immediate future. He anticipates a period of consolidation rather than a return to rapid, unchecked growth.