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9:24 AM, 1st May 2024, About 3 weeks ago
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UK house prices saw a slowdown in annual growth in April of just 0.6%, down from 1.6% in March, Nationwide reveals.
It also says that the month-on-month price fell 0.4% from March to April.
The slowdown in house prices is down to affordability issues, including long-term interest rates rising in recent months.
House prices are now 4% below their peak recorded in summer 2022.
The rising cost of living and higher mortgage rates are significantly impacting first-time buyers with nearly half (49%) delaying their purchase plans, a Nationwide survey found.
Of those, 53% point to high house prices as the main reason.
Also, 41% said that rising mortgage costs are a barrier to buying, and 84% said the cost of living has affected their ability to save for a deposit.
However, 55% of prospective first-time buyers are willing to compromise by moving to a cheaper area or buying a smaller property to overcome these challenges.
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “April was a bit of a washout for sellers, with rising mortgage rates pouring cold water on the fires of optimism that had been lit under the market early in the year.
“First-time buyers face the worst of all worlds, as rising house prices and more expensive mortgages price them out of the market.
“According to Moneyfacts, at the end of January, the average two-year fixed rate mortgage cost 5.56%, and by the end of April it cost 5.83%.
“It takes us back to the levels we last saw in the first week of January this year.”
Anna Clare Harper, the chief executive of sustainable investment adviser GreenResi, said: “When prices are rising, this is considered to create and be created by positive sentiment.
“Ultimately, though, price rises ensure that housing is getting less affordable to first-time buyers.
“This is not exciting news, on the face of it, but small rises and falls in pricing month-on-month are, actually a very positive thing.”
She added: “At a time of great difficulty – cost of living crisis, housing crisis and many other crises of confidence, it is a credit to the stability of the housing market that it remains relatively stable, when prices for other types of property such as shops and offices have taken bit hits, frequently 30-40%.”
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “We are not surprised by the small drop in property prices.
“However, underlying demand is much more resilient than it was a few months ago, coinciding with the stronger spring market.
“There is confidence that affordability will improve now that inflation seems to be more under control and despite recent relatively small increases in mortgage payments.”
Tomer Aboody, a director of property lender MT Finance, said: “With a drop in house prices said to be created by a lack of affordability among buyers and uncertainties around interest rates and inflation, some stability or help is needed.
“Whether this comes from reduced interest rates, more flexibility on mortgages or potentially some stamp duty reform, buyers need to feel confident that they can commit to a purchase and move.”
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