In the latest data released by online property listing website Rightmove, the average house asking price jumped by the largest increase in ten months to almost £370,000. The £5,279 increase to the average asking price is a significant amount considering the Bank of England’s standard base interest rate has remained steady at 5.25% since September 2023 and inflation has rested at double the target rate at 4.0% in December and January. There is little in the economy to have signaled such a significant increase of buying in the housing market.

Next week the newest inflation report will be released. That will be on 20 March, and the following day will be the Bank of England’s Monetary Policy Committee (MPC) meeting. The target rate set by the Bank for inflation is 2.0% and the current rate is double that at 4.0%. This time last year, inflation was in double digits, so while the inflation rate is double target it is moving in the right direction, or at least it was for a while. In November, inflation had dropped to 3.9%, but increased to 4.0% in December and remained the same in January. The March report is expected to show a decline in February to 3.6% according to a poll of economists by Reuters.

Optimism among UK estate agents has grown to the highest level in two years. The Royal Institution of Chartered Surveyors (Rics) recent house price expectations score doubled to 36 in February from January’s score of 18. The February score is the highest since June 2022. The Rics report offers a strong insight into the housing market through the opinion of estate agents. Their hands-on experience within the market offers a unique viewpoint of both the current and near future market.

Valuable information for borrowers will come next week. On 20 March, the inflation report will be released, and the next day will be the Bank of England’s Monetary Policy Committee (MPC) meeting in which they will be responding to the newly released inflation rate. Inflation had dropped to 3.9% at the end of last year only to rise to 4.0% where it has sat stubbornly for a few months. Of course, the expectation is for a shift in the inflation level toward the target set by the Bank of 2.0%, but if it remains steady or rises, the MPC might take an assertive stance.

In an effort to help first time home buyers, there had been a rumored home buyer scheme that would be announced near the release of the spring budget. The details were well discussed and there were those voicing for and against the scheme. The expectation was for an opportunity to assist home buyers with a lower deposit of only 1.0%. This was offered as a solution due to the difficulty of saving for a deposit, which has been reported as taking an average of ten years to do so. However, there were those that believed it would put homeowners at a greater risk of falling into negative equity especially if property values declined from the current higher prices.

In an act of resilience against the forecasts for the first half of the year, the housing market has recorded an average house price near the peak recorded in 2022. Expectations for the first half of 2024 were for consumers to still feel the impact of inflation as it slowly creeped toward the target level of 2.0%. In addition, borrowing would remain expensive as the Bank of England’s Monetary Policy Committee (MPC) put pressure on inflation to remain on a downward trajectory toward target. The ability to buy a home was considered to be more difficult to accomplish until inflation eased borrowing costs later in 2024. This would cause a stall in growth in the housing market, as well as lower asking prices and buyers would return in the last part of the year and possibly not until 2025.