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House Price Boost could just be momentum … or it could be better news

The latest index, from the Halifax, shows house prices rose 0.4 per cent in February – the fifth consecutive monthly increase. They’re up 1.7% in a year and this takes the typical home’s value close to the the peak reached back in June 2022.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “The power of momentum has helped keep house prices rising into February. It’s a slower rise than January, as mortgage rate cuts eased, and there’s every chance this could peter out in the face of higher rates. However, after five months of house price growth, optimism is building that this could be the new normal.

“January’s pick up wasn’t just the enthusiasm of the new year, mortgage rates played a huge role too. The average 2-year rate dropped from 5.93% on the 2 January to 5.56% at the end of the month, according to Moneyfacts. However, February brought market concerns that the Bank of England wouldn’t cut rates as fast as it hoped, so banks factored in higher rates for longer, and by the end of the month, this meant the average 2-year mortgage rate rose to 5.75%


“Mortgage changes have a lag effect on demand, because those approved in January will tend to fund the sales in February, and to a certain extent in March, but their impact will diminish over time. This may be what we’re seeing in the figures.

“However, there is still plenty of optimism in the market. Prices are getting close to the peak in 2022, and we’ve racked up consecutive five months of rises now. With more buyer demand showing up in the RICS residential market report in January, sellers will be hoping that more residual demand is here to stay. 

“An awful lot will depend on the wider economy. There’s still a good chance there are more difficult economic times on the horizon, and the Bank of England is fairly gloomy about the outlook. However, we may well be out of a recession, and as the second National Insurance cut of the year filters through into people’s pockets, it could fuel a bit more spending, and consumer optimism. Sentiment plays such a vital role in this market that it could help keep us in positive territory in the coming months – even with higher mortgage rates.

“All this is good news for sellers, but less positive for first time buyers. There was no joy for them in the Budget, and in a rising market, the pressure will be on to build as big a deposit as fast as possible. 

“If you have at least a year until you plan to buy, and you’re aged 18-39, you can consider a Lifetime ISA, so the first £4,000 a year you put towards your deposit will be boosted by a £1,000 bonus from the government. There's still an awful lot to save, but it's a great step in the right direction.”

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    My daughter is looking now as a first time buyer, prices are certainly creeping up, but the biggest issue is supply 😱 there hardly is any, thus the price increases I guess 🤔. She is fine as her deposit is substantial and we have recently sold one of our BTL’s, we are splitting that between my two children, zero issues with us….. but other FTB’s 😬🤷‍♂️🆘

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    Prices will only fall if demand falls but with a housing shortage and increasing population, there's no chance of that happening.

    Apart from the hassle and everything the SNP and their little Green helpers throw at Scottish landlords, I still believe the PRS is a good long term bet.

    My £20K float for unexpected repairs, voids and defaults is currently earning over £1200 in various high interest accounts but my £4 million property portfolio is earning nearly £300k gross rental a continuing to appreciate by six figures, so still a better return than savings, which only two years ago earned a pittance and will probably be back down next year.


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