UK house prices beat forecasts and rise again
First published on KensingtonHouse.com on 1 February 2024. Figures, forecasts and quotations reflect that date and have not been updated. Read it as a record of the market at the time, not as a current view.
For later official context: at its meeting ending 16 September 2026 the Bank of England held Bank Rate at 3.75%. Bank of England, September 2026
National house prices rose by 2.9% in the final three months of 2023 according to the Halifax house price index, confounding the media’s expectations who continue to promote the false idea that the property market is not as strong as we know it is.
“The UK property market has now proved itself extremely resilient to an environment of higher interest rates”
Robert Gardner, Nationwide’s chief economist, remarked on the “significant change” in market expectations for the future of interest rates, “which, if sustained, could provide much-needed support for housing market activity”. He further commented that given The Bank of England elected to hold the base rate at 5.25% for the third meeting in a row of the Monetary Policy Committee “lower borrowing costs, together with solid rates of income growth…should help underpin a modest rise in activity in the quarters ahead.”
Many analysts now expect cuts to the base rate before the summer – particularly after the inflation data released in January saw the Consumer Prices Index inflation rate fall to 4.0%, its lowest level since September 2021. Experts at Pantheon Macroeconomics expect policymakers to cut rates by 0.25% in May 2024 and see the base rate falling to 4.5% by the end of the year, while Tom Stevenson, investment director at Fidelity International, commented: “Financial markets are now pointing to interest rates of 4.25% in the UK by the end of 2024”.
At Kensington House, we believe that the UK property market has now proved itself extremely resilient to an environment of higher interest rates. Strong wage growth, low unemployment and a post-2008 policy of rigorously stress-testing mortgage applicants have all helped support prices. The market looks stronger than ever when the data includes cash purchases, which make up a significant proportion of property transactions in the capital.
Editorial note: the company name has been updated to Kensington House.
Original publication: kensingtonhouse.com, 1 February 2024. The organisations quoted are named in the text; their figures are reported as they stood on the publication date.