Halifax March house price index: "Affordability is absolutely pivotal in the property market right now"

Homeowners are getting so many mixed signals about house prices, it's no wonder the housing market is in a state of flux. Many vendors are still unrealistic on price and following the market down. Buyers are waiting for the Bank of England to cut the base rate and mortgage rates to fall further. Until then, buyers and sellers are engaging in a Mexican stand-off.

Rates are high and household budgets are being squeezed, which makes affordability challenging. We have seen first-time buyers return to the market in 2024, however they need more help with innovative schemes and a reduction in the bank base rate. House prices should remain steady and flat in 2024, so activity will increase if we see levers pulled to improve affordability. All eyes are on the next set of inflation data and Threadneedle Street.

Confidence is king. Sadly, the king has been absent in the property market for a while, with lots of talk and fear around interest rates. Some people are worried they may commit to a property purchase and see rates increase, others are holding off thinking rates are going to fall and they can get a cheaper mortgage. In either scenario, the result is a slow market, whilst everyone waits for 'something'. However, it may be that the 'something' never actually arrives. Even if the base rate reduces, which is widely expected, it will have a marginal impact on mortgage rates, which have already priced the expected reduction in. As time goes by and the feared increases don't come, and the hoped-for reductions don't come, then people will get used to this level of mortgage interest being 'normal' and so begin to feel more confident in making those big decisions around buying property or moving home. How long it takes for that confidence to return is anyone's guess.

Affordability is a real issue at present. The cost of borrowing is making buyers think whether they should buy something smaller, in a cheaper area or wait to see if borrowing gets cheaper. We need to see the Bank reduce the base rate for conditions to improve. Two or three rate reductions would really ignite the market. Any incentives to help with stamp duty would also help drive activity levels. In London, there are definitely fewer landlord investors at the moment. Most buyers in central London are cash buyers who are buying for themselves to live in. Buyers are not having to negotiate so hard on price now as most sellers have come to realise the market has been price sensitive so have priced their properties accordingly. I am expecting house prices to stay the same throughout 2024 and possibly start increasing in 2025 if we do see at least a couple of interest rate drops.

Here at the coal face, activity during both March and the first quarter has been up hugely on the same quarter last year. It's always worth bearing in mind that house transactions take over three months on average to go through meaning that anything measuring sales and completions will be many months behind the curve. With rate cuts seemingly round the corner, I'd expect to see house prices increase over the year.

This is another demonstration of the great divide between the Halifax and the Nationwide in their House Price Indices. We expected that the Halifax would show a different stance to their competitor. We fear that both the general public and mortgage lenders are going to be caught out by the rush that will inevitably come once the Bank of England does the obvious, shortly, and reduces the base rate. The capacity of available property and staff at lenders is low at present, especially the latter. 2024 looks very much to be demonstrating a lively market for first-time buyers, downsizers, and upsizers.

Affordability concerns loom large, with recent data showing a slight house price dip exacerbated by higher interest rates, hindering transactions and potentially prolonging sluggish market activity. A single base rate cut might help, but 2-3 reductions within six months could significantly reignite the 2024 property market, boosting buyer confidence and demand. In the South, downsizers and landlords are active, while the North sees more first-time buyers and landlords seeking higher yields, reflecting regional market dynamics. Buyers maintain negotiation power, with sellers adjusting to the buyer-centric market, and this is expected to persist for the foreseeable future. Property prices in 2024 are likely to be flat and steady, influenced by inflation, Bank of England rate decisions and political developments in the fourth quarter..

There is usually a slight dip in activity before summer. When summer fully hits, we will see a spike in sales. This usually then tapers out by late August and September. It's the same every year.