UK House Prices Stall / Relaxed Fed Members
UK houses prices fell for the first time in three months in a sign that the continued high mortgage rates along with stained family finances might be starting to take their toll. The Nationwide Building Society reported that the average price of a house dropped 0.2% in March versus the consensus of a 0.3% gain, with the yearly coming in at 1.6%, again below estimates of 2.4%, however above the 1.2% seen in February.
“Activity has picked up from the weak levels prevailing towards the end of 2023 but remain relatively subdued by historic standards,” Nationwide’s chief economist, Robert Gardner said, adding, “This largely reflects the impact of higher interest rates on affordability.”
The average price of a house is now just above £261,000 according to Nationwide. This is about 4.5% below the peak seen in late 2022. Overall, the property market has continued to defy many expectations that there would be a major correction, some believing it could be anything up to 40%, delivering modest gains since September when the Old Lady finally put the brakes on rate hikes.
Overnight we also heard from a couple of Fed members, both stating that while they still expect three rate cuts this year, they are in no rush to fire the starting gun. Mester said that three rate cuts in 2024 still “feels reasonable”, adding that she doesn’t pre-judge meetings and will not rule out a June move. She reiterated her view that inflation hasn’t changed much since the start of the year and expects further inflation progress, just at a slower pace. She revised her longer-run Fed Funds rate up to 3%.
Daly also said that there is no urgency to adjust interest rates and that while there is a path to cutting rates this year, “we’re not there yet”. She also believes three cuts in 2024 is still a reasonable baseline, however more or less cuts may be warranted depending on path of inflation.
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