House prices across the United Kingdom rose in April for the first time in eight months, a building society has revealed.
Nationwide recorded a modest increase of just 0.5% last month. The slight surge saw average house prices reach £260,441 last month, the figure stood at just £257,122 in March. However, house prices were down 2.7% compared to April last year.April also saw a recovery in house price growth after seven months of consecutive falls.
Robert Gardner, Nationwide’s chief economist, argued the figures showed “tentative signs of a recovery”. He also claimed the Bank of England’s data showed the number of mortgages approved for house purchases in February was nearly 40% below the rate a year earlier. But mortgage applications have reportedly picked up in recent weeks and months.
Gardner said, “this chimes with recent shifts in consumer sentiment. While confidence remains subdued by historic standards, people’s views of their own financial position over the next 12 months, and general economic conditions in the year ahead, have both improved markedly in recent months. If inflation falls sharply in the second half of the year, as most analysts and the Bank of England expect, this would further boost confidence, especially if job market conditions remain strong. Unemployment has remained relatively low despite the economic slowdown.”
The housing market was dealt a major blow last autumn after ex-Prime Minister Liz Truss instructed then-Chancellor Kwasi Kwarteng to deliver the pair’s tax-cutting mini-budget.
Threadneedle Street has continued to hike interest rates amid the ongoing cost of living crisis as inflation remains in double-figures. The Bank of England made 11 consecutive rises as the rate soared from 0.1% to 4.25%, a further increase to 4.5% could come into force after policymakers meet next week.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, remarked, "that the latest Nationwide House Price Index has revealed that house prices are holding up well despite continuing worries about mortgages and inflation. Not only are lenders being cautious, buyers are also ensuring they have sufficient resources, not only to cover repayment, improvement and other costs, as well as getting the best property deal they can before taking the plunge.”
Jonathan Hopper, chief executive of property buying agency Garrington Property Finders, added, "that while all buyers remain price sensitive, the more pragmatic are taking an increasingly long-term view in their plans rather than agonising over how prices might change over the next month or two. Sales volumes are low and there was no spring bounce this year, but supply is slowly improving – helped by the many buy-to-let landlords selling off investment properties which no longer break even following the surge in interest rates. Nevertheless, things are far from back to normal. With inflation still in double digits, the Bank of England may increase interest rates again later this month – and this would push affordability further out of reach for more first-time buyers. But at the top end of the market, where buyers tend to be less reliant on mortgage borrowing, business is getting brisker as astute buyers capitalise on softer prices to secure favourable deals that would have been unthinkable a year ago."
Adam Smith, director at Northampton-based mortgage broker Alfa Mortgages, said, “the outlook for house prices in 2023 was always going to be heavily influenced by consumer confidence, and confidence is returning, People sense that the economy may hold up better than many have predicted, and that is slowly starting to see some green shoots in the property market. That said, there are countless variables at play and one month of growth does not a market make. But in the current climate, you have to take the positives.”