New data from Nationwide has revealed that annual house price growth increased to 3% in April, up from 2.2% in March, with prices rising 0.4% month-on-month. This comes despite ongoing geopolitical tensions and rising energy costs, which have weighed on consumer confidence.
Market Resilience Amidst Challenges
Nationwide's Chief Economist, Robert Gardner, commented: "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." He noted that this is "somewhat surprising" given that consumer confidence indicators have weakened, with GfK's headline index falling to its lowest level since late 2023.
Gardner added that housing market sentiment has also deteriorated, as the Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, the weakest since 2023. However, he pointed to strong household finances as a supporting factor: "In aggregate, household debt is at its lowest level relative to income for around two decades and sizeable savings buffers have been built up in recent years."
Affordability and Interest Rates
Mortgage rates have risen amid global uncertainty, but Gardner noted that affordability had been improving due to income growth outpacing house price growth and a modest decline in mortgage rates. While swap rates have increased recently, they remain well below 2023 highs and are broadly in line with late 2024 levels. "Looking ahead, UK economic growth is likely to be somewhat weaker and inflation higher than previously expected," he said, "but the UK economy and housing market have proved remarkably resilient in recent years."
Expert Opinions
Andrew Montlake, CEO at London-based Coreco, stated: "Yes, it has been a turbulent two months for the UK property market, but, once again, it has shown its resilience and ability to weather even the toughest storms. People continue to want to buy and many, especially first-time buyers, are taking advantage of weak overall sentiment to drive a bargain."
Graham Nicoll, financial planner at NCL Wealth Partners, added: "April’s data highlights the continued resilience of the UK housing market. Improved affordability over the past year, alongside steady earnings growth, has helped underpin demand. However, elevated mortgage rates and wider economic uncertainty are beginning to pose headwinds."
Gaurav Shukla, CEO at Home Me Mortgages, noted that lenders cutting rates in April provided a stimulus, but cautioned that events in the Middle East mean "we are still at the mercy of external shocks."
