April 2023 saw a 0.5% rise in house prices, bringing an end to seven consecutive months of decline.
The annual rate of house price growth improved to -2.7% from -3.1% in March, according to Nationwide’s monthly report.
Nationwide’s chief economist, Robert Gardner, said: “While annual house price growth remained negative in April at -2.7%, there were tentative signs of a recovery with prices rising by 0.5% during the month (after taking account of seasonal effects). April’s monthly increase follows seven consecutive declines and leaves prices 4% below their August 2022 peak.”
Recent Bank of England data shows subdued housing market activity in the opening months of 2023, with the number of mortgages approved for house purchase in February nearly 40% below the level seen a year ago and around a third lower than pre-pandemic levels.
However, industry data on mortgage applications suggests a potential upswing in the coming months.
Gardner also pointed to recent shifts in consumer sentiment, noting that people’s views of their own financial position over the next twelve 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 expect, this would likely further bolster sentiment, especially if labour market conditions remain strong,” he added.
A modest recovery in housing market activity is expected, but any upturn will likely be fairly slow as household finances take time to recover. “Mortgage interest rates are also likely to act as a headwind. While they are well below the highs seen in the wake of the mini-Budget last year, rates are still more than double the level prevailing a year ago,” Gardner explained.
However, solid gains in nominal incomes and weak or declining house prices will contribute to improved housing affordability over time, especially if mortgage rates continue to trend lower.
Reaction
Tomer Aboody, director of property lender MT Finance:
“As confidence shifts slightly into more positive territory, this is reflected in the modest growth in prices in April.
“With interest rates looking to hopefully stabilise and with the prime minister’s ambitious plan to cut inflation in half by the end of the year, buyers are finally making their move after months of waiting and stalling.
“More transactions are definitely needed for the overall strength of the housing market, however, which may require further intervention from the Government in the form of restructuring stamp duty.”
Jonathan Hopper, CEO of the property buying agency Garrington Property Finders:
“Settling mortgage rates haven’t yet reversed the correction in property prices, but they have returned some much-needed calm and pragmatism to the market.
“With average prices still falling in many areas, this is unquestionably a buyer’s market. Proceedable buyers who have their finances in place invariably hold a strong hand, with sellers fighting for their attention and often agreeing to a significant discount just to get a deal done.
“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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“This generally reliable survey, though only based on Nationwide’s own customers’ experiences, reveals 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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Average property prices fell again in April but not as far as in March as the spring market gets into gear and buyers and sellers start to see an end in sight with regard to high inflation and interest rates.
“Swap rates, which underpin the pricing of fixed-rate mortgages, have risen again on the back of short-term volatility. However, lenders continue to reduce their fixed rates, albeit at a slower pace than before, with bigger reductions seen on higher loan-to-value mortgages as they try to attract first-time buyers.”
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents:
“The rise in house prices in April shows that there’s more life in the property market than many think. House prices are still down on an annual basis but demand has been steadily increasing in the first four months of the year and this may be the beginning of the bounce back from the turbulence caused by the mini-Budget. While some discretionary buyers continue to sit tight, serious buyers remain very active. Sellers are being much more realistic on price, and are typically also buyers so they appreciate a more balanced property market. The property market armageddon some predicted is simply unlikely to materialise.”
Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group:
“The property market is powered by confidence and confidence, with each day that passes, is returning. If inflation finally enters single digits and starts to come down in the months ahead, this trend may continue. The doom and gloom many predicted simply isn’t proving to be. Buyers and sellers are finally seeing eye-to-eye on pricing and that is stimulating activity and giving the property market a lift.”
Jamie Minors, managing director at Norwich-based estate agents, Minors & Brady:
“With mortgage rates having steadily reduced and consumer confidence returning after the disastrous Kwarteng/Truss administration, we are seeing strong levels of demand matching good levels of supply. Unemployment is still incredibly low, so as long as mortgage rates don’t suddenly rise and people still have their jobs, buyers will continue to purchase, resulting in prices holding without further big reductions and a rally upwards in 2024. As ever, the property market is proving more resilient than many thought.”
Adam Smith, director at Northampton-based mortgage broker, Alfa Mortgages:
“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.”
Chris Barry, director at Gloucester-based conveyancer, Thomas Legal:
“Recently, many buyers have come back to the market as mortgage rates have edged down and that demand is reflected in this uptick in prices in April. Demand is continuing to grow as confidence and economic stability improve, which may see supply and demand meet in the middle sometime this year, creating the perfect housing market. Yes, there is a long way to go and the potential for turbulence ahead but April’s Nationwide house price data is encouraging.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“After a slow start to the year fuelled by the financial challenges households are facing, it appears as though there are now clear signs of vitality in the housing market.
“While affordability remains a huge concern for first-time buyers looking to get their feet on the property ladder, it is reassuring to know that their home is not going to lose value after they have signed on the dotted line.
“The threat of an aggressive fall in property sales has failed to materialise and we are starting to see more mortgage applications being approved meaning that buyers can get planning their next move.
“Estate agents have been using these past few months to expand their stock so that they can offer buyers a greater variety of properties to choose from.”
Carl Howard, Group CEO of Andrews estate agents:
“Spring is usually a busy season for estate agents, and thankfully April’s activity wasn’t as wet as the weather – with house prices stabilising after falling for the seven previous months.
“Sellers have pulled up their boots and put on their best can-do attitude, and being realistic on price to help move deals along.
“Demand is slowly recovering as the economic storm clouds start to clear, and there’s reason to be optimistic about the coming months.
“Sales are being supported by a boost in supply, particularly in lower price bands. Mixed with a surge in rental prices, this should also encourage more buyers into the market.
“Mortgage rates are continuing to improve, meaning less of a jolt for first-time buyers and owners whose current fix is coming to an end.”
