UK house prices recorded a 1 per cent increase in the year to February, according to Nationwide. This modest growth follows a prolonged period of stagnation, suggesting buyers are tentatively returning to the market after the Bank of England’s aggressive interest rate hikes. Yet, this recovery remains fragile.
The recent escalation of conflict in the Middle East has triggered a sharp rise in mortgage rates, pushing borrowing costs higher just as affordability was beginning to ease. This development risks undermining the nascent price growth by squeezing buyer demand. Our data consistently shows that mortgage rate spikes correlate with slower transaction volumes and price plateaus, particularly in regions with already stretched affordability.
Investors should monitor the evolving geopolitical situation closely. While the 1 per cent annual price rise may tempt some into thinking the market is stabilising, the underlying cost pressures from higher mortgage rates could dampen activity in coming months. Areas with stronger local economies and rental demand may weather this better, but broader market resilience is far from guaranteed.
Source: https://www.thisismoney.co.uk/money/mortgageshome/article-15606079/House-prices-rise-modest-recovery-Middle-East-conflict-mortgage-spike-derail-growth.html?ns_mchannel=rss&ns_campaign=1490&ito=1490
