Average house prices in the UK have risen by nearly £3,000 this month as the property market becomes "much more stable" than many anticipated, according to Rightmove.
The average home is on the market at £365,357 in March - a rise of 0.8% compared to last month. This is despite low growth and historically high mortgage rates prompting forecasts of a 10% fall in prices this year.
The increase is below the typical March rise of 1% over the past 20 years but still shows the property market is continuing to resist predicteds that there will be a significant slump this year.
Rightmove said the market was recovering from a spike in borrowing costs at the end of last year, when policies put forward by Liz Truss and her Chancellor Kwasi Kwarteng sent mortgage costs soaring and failed to restore investor confidence.
Average rates for a five-year fixed deal with a 15% deposit soared to 5.89% in October, shortly after Kwarteng’s doomed “mini-budget”.
It prompted estate agent Savills to predict a 10% slump in prices during 2023. The rate for the same mortgage deal has since fallen back to 4.65%.
Inflation has also edged down to 10.1% from a peak of 11.1%, while recent economic figures have shown the UK has narrowly missed falling into a recession.
Rightmove said the improved economic environment drove up house prices in March compared with February, when prices were unchanged. Rightmove data also showed major variations depending on the region and price bracket of homes hitting the market.
For first-time buyers and “second-steppers”, prices were up by a more modest 0.5% and 0.4% respectively, while homes in the upper price bracket rose by 1.2% to £658,702.
Prices in the north are rising much faster month-on-month than in London. In the north west, prices are up 1.1% and 2% in the north east, compared with a fall of 0.1% in the capital.
Vince Courtney, chief sales officer of Purplebricks, said: “It’s Jekyll and Hyde stuff. The market is performing quite erratically with no clear, consistent national pricing trend.
“Prices aren’t going to be like this forever, but I think we’re in for another couple of months before they settle down.”
Underlying factors such as the UK’s apparent inability to build new homes are preventing large price falls.
The rate of new house building is predicted to fall in England, the Home Builders Federation (HBF) has warned. It said this would exacerbate the country’s housing crisis and make it harder than at any point in recent history to become a homeowner.
However, property experts are still predicting an overall price fall during 2023, with mortgage rates and inflation still high amid the wider cost of living crisis.
Tom Bill, head of UK residential research at Knight Frank, said: “Downwards price pressure will persist as more owners come to the end of fixed-rate deals and supply picks up from the lows of the pandemic. We expect a 5% decline this year across the UK.”