The latest update on the property market, including why figures can vary and why there’s different price growth for different types of properties.

You may wonder why there can often be mixed reports about the state of the property market. Some sources may claim that house prices are going down, while others may say the opposite. So why does this happen, and what’s actually going on?

In short, lenders have their own House Price Indices from which to draw information. These can vary based on their own figures.

Halifax is currently reporting a small upturn in property prices for April, citing demand for smaller properties as the reason for the increase.

At the end of April, Halifax published figures showing that UK property prices have increased by 1.9%, or £5318, over the last year.

Average prices for flats went up by 2.7%, said the lender, while terraced houses went up by 2.6%. Detached homes saw an increase of 2%, while semi-detached properties went up by 1.7%.

Slowing in annual price growth

However, Nationwide reported that April saw a slowing in annual house price growth, with UK house prices falling by 0.4% month-on-month. Annually, they showed a change of 0.6% in April compared to 1.6% in March.

Nationwide’s Chief Economist, Robert Gardner, said the slowdown is most likely reflecting ‘ongoing affordability pressures’. He revealed that house prices are now about 4% below ‘the all-time highs’ seen in the summer of 2022.

Interestingly, the figures revealed in Halifax’s House Price Index showed that the rate of average growth for different property types varies greatly.

Smaller homes saw the strongest price increases in the early part of this year, with buyers adjusting their expectations to compensate for more expensive borrowing costs and cope with cost-of-living challenges.

Unsurprisingly, according to Halifax, flats and terraced houses made up 57% of all homes purchased by first-time buyers last year. Scotland saw the strongest growth in flat prices over the last year, rising by 5.9%, or £6489, to £116,477.

Semi-detached homes saw the weakest annual growth over the last year, rising by 1.7% (£4797), with the average price now at around £295,199. The North East saw the biggest increase in average price, up by 5.9% (£10,381) annually.

Housing market challenges

‘It’s important not to gloss over the challenges facing the UK housing market, given the impact of higher interest rates on mortgage affordability, coupled with a lack of supply of new homes,’ says Amanda Bryden, Head of Halifax Mortgages. ‘But scratch beneath the surface and there is a more nuanced story, one which shows that demand for different property types in different parts of the country can vary hugely.

Now that interest rates have stabilised and buyers are adjusting to higher borrowing costs, many prospective home buyers are targeting smaller properties. Adds Bryden: ‘This is especially true in first-time buyers, who have proven to be resilient over recent years, and now account for the largest proportion of homes purchased with a mortgage in almost 30 years.’

‘We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the “growth gap” on bigger properties that’s existed for most of the last four years,’ says Bryden.

First-time buyers delaying plans

Nationwide said that research carried out by Censuswide on their behalf found that 49% of prospective first-time buyers have delayed their plans over the past year. Some 84% said the cost of living has affected their plans to buy, while 55% said they would be prepared to buy a property in another part of the country where prices are cheaper.

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