House costs rise in March official figures present

House prices climbed by 0.7 per cent between February and March, according to the latest figures from the Office for National Statistics.

It means the average UK home is now worth 1.8 per cent more than it was a year ago, which is the first annual increase seen since June last year.

The typical home is now worth £283,000, which is £5,000 higher than 12 months ago, although this is still down on the peak recorded in late 2022.

Many property experts believe there is further house price growth to come.

On the up: In the year to March 2024, house prices rose by 1.8% according to the latest ONS house price index

Taking account of seasonal adjustments, prices went up 1.1 per cent in March. 

Ed Phillips, chief executive of property agency business Lomond, said: ‘House prices have continued to creep up on a monthly basis as market confidence has grown, however, we’ve also seen the first annual rate of growth since June last year, which suggests that the market is very much heading in the right direction.

‘So while homebuyers are still facing substantially higher borrowing costs, the outlook for the year ahead remains a positive one, particularly now that inflation has eased and an interest rate cut is on the horizon.’

Marc von Grundherr, director of Benham and Reeves estate agents added: ‘We’ve seen consistent growth in mortgage approval levels throughout 2024 so far and while house prices have stood firm, it was only a matter of time before this initial indicator of improving market health started to drive a stronger rate of growth.

‘The first annual increase since last summer suggests that this is now starting to materialise and while we expect a more settled year as a whole, there’s a good chance that a summer interest rate reduction could spark a house price boom, as buyers are buoyed by the first signs of improving borrowing affordability since March 2020.’

However, other experts think we could see further house prices falls before the market begins to pick up again.

This is not least because the ONS data based on Land Registry figures is based on sold prices and therefore comes with a significant time lag.

This means sold prices in March will represent sales agreed months before with many likely in place as far back as last year.

Between September last year and the end of January this year, mortgage rates were on a downward trajectory, which may have encouraged buyers into action.

> What next for mortgage rates?  

Since the start of February, however, mortgage rates have crept upwards again, which may translate into falling house prices over the coming months.

Jonathan Hopper, chief executive of Garrington Property Finders says prices have cooled as buyers have more choice

Jonathan Hopper, chief executive of agents Garrington Property Finders said: ‘For all the excitement today’s positive figures have generated, they could be a blip rather than a bounce back.

‘A statistical steward’s enquiry might even suggest they’re more likely to be a sign of just how many buyers jumped the starter’s gun in January, rather than evidence of a market galloping away at top speed.

‘These figures capture many of the sales that were agreed during the brief, but heady, weeks at the start of the year when interest rates fell and demand spiked.

‘Since then, interest rates have gone back up, reining in buyer demand just as the number of homes coming onto the market has risen rapidly.’

New build prices going up

Average new-build prices rose by 17 per cent in the 12 months to March while existing homes fell by 1.8 per cent.

Daniel Norman, chief executive of property software company Aprao said: ‘When it comes to the returning health of the UK property market it’s fair to say it’s been driven very much by the nation’s housebuilders and the new homes sector, rather than the purchase of existing stock by homebuyers.

‘New-build house price growth has far outperformed the rest of the market for many months now and this suggests that while buyers may remain restricted by the issue of higher mortgage rates, they are willing to pay the premiums attached to new-build homes in order to reap the benefits they offer.’

New-build premium: New-build prices are booming while existing home values are falling

Homes in Scotland see biggest rise

At a more local level, prices in Scotland rose by 6.7 per cent while Northern Ireland saw average house prices increase by 4 per cent.

Average prices in England and Wales rose by a more modest 1 per cent and 1.3 per cent respectively.

Within the English regions, however, there was a lot of variation in price changes.

In Yorkshire and the Humber, prices rose by 5 per cent in the 12 months to March.

Meanwhile, at the other end of the spectrum, London saw average prices fall by 3.4 per cent in the 12 months to March. 

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: ‘House prices remain high compared to historical standards, although the national average figure conceals some regional fluctuations.

‘Uncertainty around interest rates, economic stability and the cost of living is leading to caution, properties spending longer on the market and harder price negotiations. Borrowing is expensive – it’s cheaper than it was, but these relatively high rates are limiting buying power and pushing some prospective buyers out of the market altogether. 

‘The sunshine brings with it the deals and we have noticed an increase in offers over the past couple of weeks.’