ONS House Prices Index: property market ‘resilient’ despite high mortgage rates

Growth in UK house prices remained steady in April despite rising mortgage rates, the latest Office for National Statistics (ONS) and Land Registry House Price Index (HPI) has found.

Provisional estimates show that average house prices grew 0.3% month-on-month (non-seasonally adjusted) to £281,000. This figure was £3,000 (1.1%) higher than April 2023. The HPI has revised down March’s data from its provisional estimate.

The strongest monthly and yearly growth was recorded in Scotland, where the typical home cost £190,345. On a monthly basis, prices grew 1.3% and were 4.5% higher year-on-year. At the other end of the spectrum, Wales saw a -2.1% reversal compared to March’s data, with prices falling to £208,184. Compared to April 2023, prices in the nation were 0.4% up. You can see how house prices are changing in your area with this ONS tool.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

It comes as other HPIs have found that the housing market has remained steady, with little sign of a significant spring bounce due to high mortgage rates. Rightmove’s latest HPI showed asking prices remained flat between May and June, partly as a result of the general election causing greater caution at the top end of the market. Halifax painted a similar picture when it came to house prices at the mortgage approval stage.

While property experts say the run-up general election is only likely to have a small impact on the housing market, we’ve seen announcements from the major parties that could change the picture after 4 July. The Conservative Party has promised to make its temporary stamp duty cut permanent, while Labour has pledged to extend the mortgage guarantee scheme. The Liberal Democrats, Green Party and Reform UK have also made a series of housing commitments in their manifestos.

UK house prices ‘resilient’ despite April showers, ONS HPI suggests

Across England as a whole, prices grew 0.3% month-on-month to an average of £298,229. But the latest ONS data showed that house prices stalled in most of the pricier parts of the nation. Yorkshire and the Humber saw a 1.4% reversal, meaning an average property there now costs £203,110.

The East of England (-0.7%) and London (-0.2%) also saw monthly reverals. On an annual basis, house prices in the capital were 3.9% down on April 2023 - however, thanks to the ONS’s revisions, the average price in the city remains above £500,000.

The other regions of England posted moderate growth compared to March, with the South East leading the way on 1.4% making a typical property in the region worth £375,067. The b biggest yearly growth in the country was seen in the North West, where prices have soared 3.8% to £216,714.

In terms of property type, the middle of the market outperformed the top and bottom rungs year-on-year. Semi-detached homes recorded house price growth of 2.2% (almost £6,000), taking UK’s typical price for this sort of home to £274,974. Terraced houses went up in value by 1.6% (£3,500) to £231,942. Detached properties only grew 0.3% to £429,081, while flats remained almost completely flat at £229,488.

Reacting to the findings, MD of estate agency group Fine & Country, Nicky Stevenson, said: "The weather was blamed for the economy flatlining in April, but the rain didn't dampen buyers' spirits, with house prices remaining resilient. After so many buyers paused their house-buying plans towards the end of 2023, stable interest rates and the prospect of a reduction this summer has been enough to instil confidence, with many people committing to a move.

“As we expect the economic landscape to continue improving, it’s likely that we will see a spike in activity as the year progresses, especially with an interest rate cut from the Bank of England on the horizon. This would positively affect home buyers by making mortgages more affordable, increasing consumers’ spending power and helping them to get their desired properties more easily."

Is now a good time to buy or sell?

While the ONS data showed house prices have largely weathered a challenging affordability environment, transactions remain down year-on-year. The number of completions fell by more than half against the year in February in both England and Wales. The statistics relate to February because this is the most recent month the ONS has full data for.

The number of transactions plunged from more than 45,000 in England in February 2023 to just over 20,000 in the same month this year. In Wales, they tumbled by 1,300 to 1,147. Sales remained flat in Scotland and Northern Ireland.

Iain McKenzie, CEO of independent estate agency network The Guild of Property Professionals, said this “period of calm” should be viewed as an “opportunity for both buyers and sellers alike”. He added: “Sellers can benefit from continued strong buyer demand, while a more balanced market may offer better value for buyers, particularly those looking to own their first home.

“The Guild remains cautiously optimistic about the outlook of the housing market for the remainder of the year. Strong buyer demand, alongside a slowdown in house price volatility, will help to keep robust growth.”

Jonathan Hopper, CEO of Garrington Property Finders, had a less optimistic view of the prospects of the housing market over the remainder of this year. He said: “The combination of election uncertainty, and the hope that an interest rate cut is now just around the corner after inflation fell back to the Bank of England’s target, means that while there is plenty of buyer demand, it remains unhurried and highly price sensitive.

“As a result, most sellers still need to price their homes very competitively or risk seeing them sit unsold for months. For all but the most exceptional homes, buyers still hold the best cards – and those who play them well are often able to secure a discount off the asking price.”