It is surprising that conditions have remained so buoyant

The latest Nationwide House price index for April indicates annual UK price growth slowed a little to 12.1%, down from 14.3% in March with prices up 0.3% month-on-month after taking into account seasonal effects.

The average price of a property now stands at £267,620 up from £265.312 in March.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “Annual house price growth slowed modestly to 12.1% in April, down from 14.3% in March. Nevertheless, this is the 11^th time in the past 12 months that the annual growth rate has been in double digits. Prices rose by 0.3% month-on-month, after taking into account seasonal effects, the ninth successive monthly increase, though this is the smallest monthly gain since September last year.

“Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels. Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.

“Nevertheless, it is surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence. Indeed, consumers’ expectations of their own personal finances over the next twelve months has dropped to levels last seen during the depths of the global financial crisis more than a decade ago. Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased (though they remain low by historic standards).

“This month, we conducted a survey of c3,000 consumers across the UK to better understand current market conditions. It was striking that 38% of respondents stated that they were either in the process of moving or considering a move. The proportion was particularly high in London, where almost half said they were moving or considering a move. But even in Wales, where the share was lowest, more than 25% were either moving or considering a move – very high, given that only c5% of the housing stock turns over in a typical year in the UK.

“The proportion of people considering a move was highest amongst private renters (at 45%) but was also elevated amongst those living with family (44%) and those owning their own home (30% of those owning their property outright and 42% of those owning with a mortgage). Interestingly, despite mounting pressure on household finances, the share of people moving or considering a move was higher than during the height of the pandemic in April last year across all tenure types.

“We continue to expect the housing market to slow in the quarters ahead. The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”