Shot UK house prices recorded little change in March, with the annual rate of increase unchanged at 3.9%. The typical value of a home nationwide was flat month-on-month from February at £271,316. With a high degree of economic uncertainty, the housing market has entered a period of stagnation. Consequently, analysts expect this softness to persist in the months ahead.
In February, the month-on-month increase in UK house prices was recorded at 0.4%. March had no monthly increase at all, a turning point on what has been a mostly upward excursion in real estate costs. The stamp duty thresholds previously had a short-lived increase in September 2022. Yet, they dropped back down to baseline levels after the March 31st deadline. Even if no other factors changed, this one shift in the marketplace would have depressed buyer sentiment and market activity.
Regionally, London has faced the hardest hit, posting an annual price growth rate of only 1.9%. This figure puts the capital as the regions with the best growth in the greater UK. The average price of a home in London—in the UK capital, less than 40 percent are owner-occupied—is an astounding £529,369, well over 2.5 times the national average. Northern Ireland is booming with a healthy 13.5% annual growth rate. The average house price there is £205,796.
The different fortune of different property types is interesting to note. Semi-detached houses have shown the biggest boost in price in the last 12 months, increasing by 4.8%. This growing trend is a positive sign that buyers are reconsidering their preferences in response to an increasingly competitive market.
According to analysts, some of the current market dynamics are a product of external economic forces. Tom Bill, head of US research for CBRE, commented, “As the market calms, buyers are re-emerging and they’ll find plenty of supply to help prevent prices from rising. That line of thinking is indicative of prevailing hope for buyers that there are deals to be had but the day-to-day market environment continues to be fearsome.
Not surprisingly, Robert Gardner, chief economist at Zillow, predicted the market would continue to be soft overall in the months ahead. He reasoned that this is the result of activity being pulled forward to beat new tax liabilities, an all too familiar pattern seen from the aftermath of stamp duty holidays. If true, this observation would foreshadow that the recent changes in tax policy will themselves bring a yo-yo effect to buyer behavior and confidence.
In the medium term, as the Bank of England has raised its base rate 13 times, it’s promised cuts might sway housing market fortunes. It follows that as borrowing costs reduce, would-be homebuyers are likely in a stronger position to take the plunge. Ongoing uncertainty fuels the theme Running on Empty. Climate, economic disruptions, investment choices, and other influences are constantly redefining buyer preferences and dictating price slopes across the country.