Despite gloomy predictions for the housing market, there are strong signs of a Spring boost.

In the aftermath of last Autumn’s disastrous Truss/Kwarteng mini-budget, commentators and industry experts warned of tumbling house prices, rising interest rates and galloping inflation.

However, as the Chancellor revealed in his Budget speech, the UK is not entering a recession this year, global inflation rates, on the whole, appear to be on the downward slope and activity in the housing market is definitely on the rise.

Inflation did continue to increase last month (the Consumer Price Index rose by 10.4% in the 12 months to February, up from 10.1% in January) and the Bank of England’s Monetary Policy Committee duly raised the base rate for the eleventh consecutive time (up by 0.25%, to 4.25%).

But despite these negative indicators house sales remain relatively buoyant.

The underlying demand for homes far exceeds supply and people still aspire to own their own homes and progress up the property ladder. All they’ve been waiting for is stability.

Important investment

Now that they feel sure the economy won’t be subject to another economic shock, they feel safe enough to make what will inevitably be one of the most important investments of their lives.

This could only have been enhanced by the announcement in the Chancellor’s Spring Budget that inflation is forecast to fall to 2.9% by the end of 2023 – a clear signpost to more stable times ahead.

And this has been reflected by mortgage lenders who, after withdrawing thousands of products from the shelves last September, have re-entered the market and eased rates as a result. Borrowers with base rate trackers are having to pay more each month, but many fixed rate deals have been coming down steadily – largely because the base rate increases had already been factored in.

At the end of March, the  mortgage approval data from the Bank of England showed that approvals in February stood at 43,536, up from 39,647 in January (+9.8%).

The latest figures show that this is the first monthly increase since August of last year.

CEO of Octane Capital, Jonathan Samuels, said: “We had previously seen well in excess of 60,000 mortgages approved on a monthly basis throughout the pandemic market boom period. However, this level of monthly buyer activity has been in sharp decline ever since a shambolic September mini budget that thrust the market into uncertainty.

“This increase, albeit a marginal one, suggests that the green shoots of buyer demand are once again starting to grow and we expect these green shoots to blossom over the coming months, as we enter what is traditionally the busiest time of year for the UK property market.” 

And founder and CEO of easyMoney, Jason Ferrando, commented: “Today’s uplift in mortgage approvals shows that the spring surge in market activity is underway and while the volume of mortgages being approved is unlikely to return to the highs of last year, an increase in buyer activity bodes very well for the wider health of the property market.”

Of course, this doesn’t mean that everything in the garden is rosy and another house-buying boom is just around the corner. But it does indicate that there has been a return to normality in the housing market following a long period of high inflation and last Autumn’s economic shock.

Intent to transact

Latest figures from the Office of National Statistics showed that house price inflation eased in January for the third consecutive time.

Even so, average UK house prices were £290,000 in January 2023 – still up by £17,000 on January

2022.

CEO of Alliance Fund, Iain Crawford, said: “Having weathered the period of market uncertainty seen since the closing stages of last year, the nation’s homebuyers are now emerging from their winter boltholes with intent to transact. It may take some time before this returning buyer activity helps to stabilise house prices, but it would appear as though we have now seen the back of what many previously predicted to be a property market downturn.”

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