UK house-price growth grinds to a halt after loan costs surge
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UK HOUSE prices failed to grow over the past year as headwinds from rising mortgage rates, political uncertainty and the Iran war build.
The average value of a home was £268,000 (S$459,450) in March, unchanged from a year earlier, the Office for National Statistics said on Wednesday.
It marked the first 12-month period of zero growth in almost two years. House prices fell 0.2 per cent in March on a seasonally adjusted basis, the first month-on-month decline since December.
Pressure on the housing market is expected to grow as the Iran war drags on, as household finances are squeezed by higher energy prices and mortgage rates.
With Prime Minister Keir Starmer facing a potential leadership challenge following disastrous local election results, uncertainty over the direction of the government is also expected to weigh on demand.
Borrowing costs for homebuyers have risen sharply since the Middle East conflict broke out as traders bet on the Bank of England hiking interest rates to contain inflation.
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The average two-year fixed-rate mortgage is at 5.73 per cent, according to Moneyfacts. That is 0.9 percentage points higher than in late February just before the US and Israel attacked Iran.
More timely industry data has shown a mixed picture with some signs of demand for mortgages holding up. The full impact of the conflict has yet to show up in the ONS data, which is based on completed housing transactions.
Nathan Emerson, chief executive of industry body Propertymark, said the housing market “remains active but measured.”
“Buyers are continuing to view and make offers, but they are negotiating more carefully and remain highly conscious of value and monthly mortgage costs,” he said.
The ONS data showed a varying picture across the country. Average prices in London were down 2.1 per cent from a year earlier, making it the worst-performing UK region.
The North West of England, North East and Yorkshire and the Humber all saw their first annual price falls since 2024. Meanwhile, prices in Northern Ireland, Scotland and Wales continued to climb. BLOOMBERG
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