Savills has revised its mainstream house price forecasts for 2024 – 2028. At the beginning of November last year, Savills had forecast that house prices would fall by an average of -3.0% in 2024 and that housing transactions would remain at around 1m for the year.

At that time, a 75% LTV mortgage from Nationwide on a two-year fix cost 5.34%. Mortgage approvals were below 50,000 per month. One of the most reliable lead indicators of house price movements – the reading for new buyer enquiries in the RICS Housing Market Survey – was still in negative territory (with a net balance of 23% of respondents saying they were still falling in October).

Yet the average UK house price rose by a net figure of +1.1% in the first three months of the year, according to Nationwide (rising in two months and falling in one). That brought annual house price growth to 1.6% at the end of March. Furthermore, monthly mortgage approvals in February rose above 60,000 for the first time since September 2022, and the RICS reading for new buyer enquiries moved back into positive territory.

This recovery has primarily been underpinned by an easing of mortgage rates. A highly competitive mortgage market meant lenders have fairly aggressively priced in the prospect of cuts in bank base rates. As a result, while the bank base rate remains at 5.25%, the cost of the same two-year fixed-rate Nationwide mortgage now stands at 4.84%, while a five-year fix carries an interest rate of 4.50%.

Savills reports: ‘Not only are fixed-rate mortgage costs lower than we anticipated at this stage, but they have also been much less volatile. And this, combined with a slightly improved outlook for economic growth, has given buyers more confidence.