House prices rose just £14 last month as Bank of England rate hikes chill demand
UK house prices rose by just £14 last month indicating possible buyers are turning their noses up at sellers slapping huge tickets on their homes, new figures out today reveal.
The average asking price for a home in the UK came in at £362,452, making last month’s increase the smallest between January and February since property search site Rightmove started tracking the data in 2001.
Asking prices in London rose at one the fastest monthly rates for some time, up 2.1 per cent to over £680,000.
Camden has the most expensive homes in the capital, with asking prices up more than 17 per cent to £1.2m over the last year.
Barking and Dagenham is the cheapest borough to buy a home in London at £371,000.
Analysts have warned house prices could drop as much as a fifth this year driven down by homeowners having to lower prices to attract buyers facing higher mortgage rates.
Although a small monthly rise, Rightmove’s house price index indicates the property market is actually holding better than expected.
“Prices remaining flat rather than falling as some expected could be seen as a positive indicator for the year ahead,” the search site said.
Volatility in the mortgage market after former prime minister Liz Truss’s mini budget rocked international investors has eased, with rates falling back below five per cent, according to Rightmove.
House price growth has stalled of late
That drop has likely enticed some buyers back to the market, with “the number of potential buyers contacting agents is up by 11 per cent in the last two weeks compared with the same period in 2019,” Tim Bannister, director of property science at Rightmove, said.
Mortgage costs neared six per cent in the weeks after Truss’s £45bn of unfunded tax cuts raised rates in the gilt market, which lenders use to calculate what they charge prospective homeowners.
“The crucial difference is stability in the mortgage market, which means plans have been reactivated,” Tom Bill, head of UK residential research at estate agent Knight Frank, said.
“The true strength of the market will be put to the test in spring, along with the price expectations of sellers. As budgets come under pressure, we expect prices to fall by around five per cent this year,” he added.
Inflation has been running in the double digits for several months now, forcing the Bank of England into 10 successive interest rate rises to quell prices.
Although that has helped bring inflation down three months in a row from a peak of 11.1 per cent to 10.1 per cent in January, it has piled pressure on household finances.
Exclusive polling carried by research firm Ipsos for City A.M. found more than one in three Brits expect their mortgage or rent payments to rise this year.