Net mortgage approvals for house purchases rose from 60,500 in February to 61,300 in March, the highest number since September 2022, data from the Bank of England revealed yesterday while HMRC said March saw the third consecutive rise in property transactions.
John Phillips (main picture), Chief Executive of Spicerhaart and Just Mortgages, says the market movements mirrored those of the Group having seen strong demand for both appointments, bookings and valuations within its estate agency branches.
property positive
He adds: “The positive momentum we’ve been seeing in the market certainly continued in March with the highest number of net mortgage approvals since September 2022.
“This in spite of the fact of another disrupted month with an early Easter and half terms across the country.
“The wheels of the mortgage market are certainly moving. This is all hugely positive – we just have to hope the recent unsettling on swap rates and subsequent rise in mortgage rates across the market doesn’t upset the apple cart.”
Tom Bill, head of UK residential research at Knight Frank, says: “Mortgage approvals and transaction numbers edged higher in March but it doesn’t feel like the UK housing market is ready for take-off this spring.
“Rates are rising as stubborn underlying inflation pushes the prospect of a bank rate cut further into the distance.”
He adds: “A wave of owners rolling off sub-2% mortgages agreed in early 2022 is adding to the financial pressures in the system.
“Demand will strengthen as more sub-4% mortgages reappear, which will only happen when services inflation heads closer to the Bank of England’s 2% target, which means there should be a more obvious seasonal bounce in activity this autumn.”
Mortgage approvals are a very good indicator of future market activity and are already feeding through to more agreed sales.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “These figures show rising approvals at a time when mortgage rates were more stable but since then they have risen a little.
“Nevertheless, mortgage approvals are a very good indicator of future market activity and are already feeding through to more agreed sales, viewings, listings and exchanges of contracts.”
REVIVING PROPERTY MARKET
And Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “A third consecutive rise in home sales in March indicates a reviving property market, as improving economic conditions ease household financial burdens.
“With inflation declining, mortgage approvals on the rise, and rumours of an imminent base rate reduction by the Bank of England, buyer confidence has received a much-needed boost in 2024.”
He adds: “If we finally see a reduction in the Bank of England’s base rate next week — which has remained at 5.25% since August last year — this could provide a significant boost to sales as we move further into 2024.
“Such a move would enhance affordability, enabling more prospective buyers to secure their dream properties.”
Agents returned from the Easter break to the news that house prices rose 1.6% in the year to March.
Figures from Nationwide showed prices rising more quickly than the 1.2% annual increase recorded in February.
But it wasn’t all good news, as prices fell 0.2% compared to the previous month, following a 0.7% rise in February.
Best performing
Northern Ireland was the best performing region, with annual prices up 4.6%. While the South West was the weakest, with prices down 1.7%.
Meanwhile, data from the Bank of England showed mortgage approvals for house purchases rose from 56,100 in January, to 60,400 in February.
Robert Gardner, Nationwide’s Chief Economist, says: “Activity has picked up from the weak levels prevailing towards the end of 2023, but remain relatively subdued by historic standards.
“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.”
If these trends are maintained, activity is likely to gain momentum.”
Gardner says there are some good signs though, with new buyer enquiries picking up.
“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,” he says.
INDUSTRY REACTION
Matt Thompson, head of sales at Chestertons, says: “In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget.
“As this wasn’t the case, the majority of these buyers have since resumed their property search. As a result, March concluded the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”
Tom Bill, Head of UK Residential Research at Knight Frank, says: “House prices have risen marginally but the direction of travel for the UK market has been sideways so far this year.
“Demand will be unleashed once there is a more permanent drop in mortgage rates and that requires fewer mixed signals around inflation and a rate cut to appear firmly on the horizon.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Though only a modest rise, we again see the housing market demonstrating its resilience, bearing in mind these figures do not include cash purchases which make up around 40 per cent of the total.
“Price movements are important, especially in such a long-established report, as they have a significant impact on buyer confidence,” he says.
“We are finding in our offices that prices are fairly steady, mainly down to hard bargaining and more choice than any big change one way or the other.”
Tomer Aboody, Director of MT Finance, says: “Another rise in house prices underlines the confidence being felt in the market.
“Stable interest rates, more favourable mortgage rates than this time last year and less than half the inflation, are persuading buyers that it is time to make their move as the traditionally busier spring market picks up,” he says.
“All-important transaction numbers are also rising, albeit from a low base, demonstrating increased confidence among buyers that the worst of the uncertainty and market turmoil may be behind us.”
Guy Gittins, Foxtons CEO, says: “The UK property market has well and truly sprung into action in recent months and we’ve seen a notable uplift in the volume of sales enquiries, viewings requests and the number of offers being submitted.
“It’s fair to say that the green shoots of positivity seen since the closing stages of last year are blossoming and this is helping to cultivate positive house price growth,” he says.
“Higher mortgage rates do remain a concern for many buyers and will continue to influence the price they are able to pay to a degree.”
Ed Phillips, Lomond CEO, says: “Slowly but surely, the UK property market is responding to the overarching air of stability that has developed since interest rates have been held at 5.25%.
“While we’re yet to see any notable jump in property values just yet, market momentum is building, with a firm foundation now laid to facilitate further growth as we head into what is traditionally the busiest time of year.”
Marc von Grundherr, Director of Benham and Reeves, says: “As we approach the spring selling season a very marginal decline in the monthly rate of house price growth should be viewed as nothing more than the market pausing for breath before the floodgates open.
“The real measure of market health is the annual rate of growth and a 1.6% jump demonstrates that we are very much heading in the right direction, and it’s full steam ahead for the remainder of the year.”
Jason Harris-Cohen, CEO of Open Property Group, says: “The market has continued to tiptoe forward in 2024 as buyers look to make their move.
However, while the outlook is positive for the year ahead, sellers will need to remain patient,” he says.
“Not only will the higher cost of borrowing continue to prove problematic, but an uplift in market activity is also likely to increase fall through frequencies, while also delaying the time it’s taking to sell.”
Verona Frankish, CEO of Yopa, says: “The appetite of the nation’s homebuyers may have been dampened by higher mortgage rates, but it certainly hasn’t disappeared, as demonstrated by the improvements seen in mortgaged approved house prices seen in recent months.
“With the seasonal spring surge in market activity also imminent, it’s only a matter of time before we see the UK property market shift up a gear with respect to both sales volumes and house price growth.”
Mark Harris, CEO of mortgage broker SPF Private Clients, says: “What happens next with mortgage rates could have a significant impact on property market activity and ultimately house prices.
“Buyers and sellers have been more active since the start of the year as it looks as though base rate has peaked, and the next move in rates will be downwards,” he says.
“However, affordability is still an issue for many, thanks to many consecutive rises in base rate before we got to this point, along with the elevated cost of living, particularly energy costs and food.”
Nathan Emerson, CEO of Propertymark, says: “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,” he says.
“However the UK Government must look to make houses equally affordable for buyers and that can only be done by building more houses,” he says.
“Propertymark’s own Housing Insight Report found there has been an 80 per cent increase in the number of new properties becoming available, ultimately making it easier for people to consider a move.”
Anthony Codling, MD of Equity Research at RBC Capital Markets, says: House prices nudged down in March by 0.2% on a seasonally adjusted basis, but with wage growth ahead of house price growth housing affordability is improving.
“On an annual basis house prices were up 1.6%, but there is evidence of a North-South divide with house prices rising in the North and softening in the South,” he says.
“However, overall, we view house prices as stable, and stability is what the housing market needs in our view. Stable conditions will encourage more people to move home, and the level of housing transactions is on the up.”