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Your March market update

From interest rates to house prices: How are the markets looking as we move into spring?

st lukes mews spring

It’s been a long, rainy March — that’s for sure. But Sunday brought some good news, with the start of British Summer Time and the official beginning of spring. Longer days, warmer weather, and the commencement of the house-selling-season.

Yep, spring has historically been the best time to sell your house, but is that the case this year? And what are house prices doing right now? Plus, a look at interest rates to help you understand last week's Bank of England announcement. We've got it all in your March market update.

Interest rate rise

Firstly, here’s a mini crash-course in interest rates and inflation, following Thursday’s announcement that interest rates are still on the rise:

What are interest rates?

The interest rate is set by the Bank of England’s Monetary Policy Committee (MPC) each month. It is the rate at which commercial banks can borrow money for central banks. What does it mean for us normies though? Basically, interest rates impact the economy and inflation.

Why are they increasing?

To quell inflation. We've seen high rates of inflation, which are largely a result of the war in Ukraine and the Covid pandemic. Remember: as a general rule, interest rates go up, inflation comes down. At least, that's the plan.

What is inflation and why are we trying to control it?

Inflation means everything from baked beans to bog roll is more expensive. When inflation is high, you can get less for your money. We currently have high inflation because of raised demand and lowered supply. The hope is that heightening interest rates now will ensure lower inflation throughout the year - let’s see.

Why does increasing interest rates decrease inflation?

Mainly because hiking interest rates means it’s more expensive for us to borrow money, which then means we’re not spending as much. This causes a decrease in demand. This gives time for the supply to catch up, plus encourages suppliers to lower prices to encourage buying. So, inflation decreases. 

OK, all those little bite-sized pieces ingested properly? Great. Now you’ll understand when the next BofE announcement comes around. (Don't worry, we'll be back to talk you through it.)

Remember: as a general rule, interest rates go up, inflation comes down. "

Now... What's going on with house prices?

The mini-budget of late 2022 caused many to predict a significant slump in the economy and housing markets. Though there have been some dips in the market, thankfully it’s not the “plunge some had predicted” (says Jonathan Hopper, CEO of Garrington Property Finders).  There have been year-on-year dips, and in January, the average UK house price fell by 1.1% - taking it to £289,818.

Spring usually ensures a robust market, as it’s the time of year when many choose to sell. This year hasn’t shown quite the increase you’d expect for March (the previous 20 years have shown a 1% increase), but there has still been a rise of nearly £3000 this month.

It’s not clear yet if we’ve totally swerved the stormy times many predicted, but for now things are levelling out. In fact, we've seen some real growth over the last year in certain areas. Below are the top 5 areas for annual house price growth:

  • Wigan (8.8%)

  • Bolton (8.4%)

  • Rochdale (8.4%)

  • Barnsley (8%)

  • Mansfield (8%)

So, in some areas house prices are really bucking the trend — but we'll just have to keep watching, and we'll keep you updated every step of the way.

Spring usually ensures a robust market as it’s the time of year when many choose to sell. "

That's all for now

At Strike, we know that an overload of information about the money and housing markets can feel stressful. While it's been a bumpy time, it’s good to know that experts are feeling relieved that so far we’ve swerved any major dips and crashes.

Though the economy is having a bit of a bumpy ride, the housing market is still staying relatively strong, which will in turn help the economy. That's the hope — but we'll keep you posted.

Have any further questions? Keep up to date with us via our social media, or reach out for more guidance. And, of course, we'll be back in April with all of the latest news.