The average price of homes coming on the market in Britain stabilised in March and activity is picking up towards more normal pre-pandemic levels after last year's mini-budget upheaval. The asking prices for homes rose by a monthly 0.8% in March after the weakest February in records going back to 2001 when they flat-lined.
However, this month's growth was below the 1.0% average monthly increase for March over the last 20 years with property sellers more cautious than usual about pricing. Tim Bannister, Rightmove's director of property science, said higher mortgage rates and economic headwinds posed challenges but the housing market seemed to be stabilising more quickly than expected after its hit in late 2022.
While borrowing costs have eased from their peak, they are still nearly double their level before former prime minister Liz Truss's unfunded tax cut plans - part of her mini-budget in September of last year - which caused turmoil in bond markets.
Sales agreed in the first-time buyer segment were improving faster than larger homes which were in demand during the COVID-19 pandemic frenzy for more space. Britain's official budget forecasters, the Office for Budgetary Responsibility (OBR), said house prices looked set to fall by 10% this year amid the squeeze on incomes and higher borrowing costs.
Households have faced double-digit inflation since September and the OBR said the country remained on track for a record fall in living standards over the two years to March 2024. The OBR also forecast inflation would fall to 2.9% by the end of 2023. The Bank of England is weighing whether to raise interest rates again this week after 10 consecutive increases since late 2021 to try to bring inflation back to its 2% target.