House price growth resilient in April, Nationwide reports
UK house price growth rose by 3% in April, according to Nationwide’s latest House Price Index, despite the expected impact on confidence brought on by the Iran war.
Nationwide also reported a monthly increase of 0.4% in April after taking account of seasonal effects, following a rise 0.9% in March. As a result, the average house price now stands at £278,880.
Robert Gardner, Nationwide’s chief economist, said: “Despite the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices, the UK housing market has continued to regain momentum following the slowdown recorded around the turn of the year.”
“This is somewhat surprising given that indicators of consumer confidence have weakened noticeably. GfK’s headline index has fallen to its lowest level since late‑2023, reflecting households’ more pessimistic views of the economic outlook and their own financial position over the year ahead.”
“Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023. This softening is likely to have been influenced by higher market interest rates following the onset of the conflict, alongside a more uncertain backdrop.”
Nationwide says that the market is likely being supported by the relative strength of household finances, with household debt at its lowest level relative to income for around two decades.
Housing affordability has also been improving steadily in recent years due to a combination of income growth outpacing house price growth and a modest decline in mortgage rates.
Robert continued: “Looking ahead, UK economic growth is likely to be somewhat weaker and inflation higher than previously expected as a result of developments in the Middle East, although the ultimate impact will depend critically on the duration of the shock and the policy response.”
“However, the UK economy and housing market have proved remarkably resilient in recent years. This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short-lived.”
Chris Hodgkinson, managing director of House Buyer Bureau, commented: “While house prices have edged up, the reality on the ground is that the market continues to stagnate. Buyer demand has cooled, sellers are sitting on the market for longer and we’re seeing more transactions fall through as uncertainty continues to weigh on sentiment.”
“This disconnect between price growth and market activity highlights the fragile nature of current conditions and, without a meaningful improvement in affordability, it’s likely that this subdued level of performance will persist in the near term.”
Jason Tebb, president of OnTheMarket, said: “Despite the challenging economic backdrop, the housing market continues to demonstrate the resilience it has become known for. Average prices edged up slightly as focused buyers are price-sensitive and negotiating hard, while sellers realise that they will struggle to sell over-priced homes.”
“Those who need to move are continuing to transact and will be buoyed by lenders trimming their mortgage rates in recent days. The Bank of England’s decision to hold interest rates for another month should also have a steadying effect on momentum in the market, suggesting stability and no need to panic.”
“Increased stock, as sellers try to take advantage of what is usually a busier spring market, is giving buyers more choice than has been the case for a while and this should help keep prices in check.”
Source: Showhouse
