Average house prices fell by 0.4% month on month in April, new data from Nationwide’s Monthly House Price Index has revealed.
The annual rate of change also slowed to 0.6% throughout the month, down from 1.6% in March.
The average house price stood at £261,962, compared to March’s £261,142.
Robert Gardner, Nationwide’s chief economist, said: “UK house prices fell by 0.4% in April, after taking account of seasonal effects.
“This resulted in a slowing in the annual rate of house price growth to 0.6% in April, from 1.6% the previous month.
“The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.
“House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”
Reaction:
Ranald Mitchell, director at Charwin Private Clients:
“Buyers are behaving cautiously at the moment so the fall in prices in April comes as no surprise. The ebullience at the start of the year has been slowly eroded as mortgage rates have edged up. Supply has improved but the dwindling confidence in the market will only be resolved by a base rate cut. With many prospective buyers and movers stalling, and house prices largely flatlining, those waiting for better times could be in for a very long wait.”
Michelle Lawson, director at Lawson Financial:
“Rising mortgage rates have injected uncertainty into the market over the past month or so. Though there is still demand, we need a base rate cut and a Stamp Duty incentive to kickstart the market and get things moving again. Also, a General Election needs to be called sooner rather than later. The absence of a date for the General Election is adding to the mood of caution.”
James Mason, owner at Hawksman Real Estate:
“Since the start of the Summer term, we’ve seen a significant increase in activity. Lots of great family homes are coming to the market, which has resulted in a staggering number of new buyers registering their details. Rising mortgage rates are definitely a factor in the market at present so any downward movement on that front in the next few weeks would set an already smouldering market on fire.”
Tim Allcott, managing partner at Allcott Associates:
“The property market was quite variable across the regions we work across in April. House markets in The Midlands, South East and Bristol have been moving well, whereas East Anglia has lagged behind. It was a slow start to the year for Yorkshire and Lancashire, but April saw rapid, and welcome, growth in the North.
“Rising mortgage rates appear to have steadied the market slightly. We haven’t seen the springtime boom that we normally see; but the supply and sale of properties have been fairly consistent overall, suggesting that those who really want to move are still finding a way to make it work, either by adjusting expectations of what they can afford or forking out more on mortgage payments with the assumption that rates will drop in coming years. The housing market is ticking over. I’d expect that first cut in the base rate to bring on a mini housing boom as better mortgage rates will persuade those who are currently undecided about moving to take action.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“If you wanted evidence of how mortgage rates can impact the property market, this is it. Enquiries from buyers were buoyant in April, but many are holding off pulling the trigger and offering on properties. More properties are being added daily, but many that are getting viewings but not offers. The tinder is dry, but awaiting the spark to set the market on fire. That spark will be a rate cut by Threadneedle Street but we may have to wait until the second half of the year.”
Simon Bridgland, broker/ director at Release Freedom:
“If you stripped out remortgage and product transfer business, then last month would look like I put my feet up. April was slightly tentative overall as people still come to terms with the new world order of interest rates. I would guess that the ever improving levels of available stock will entice more to start the process of buying especially as we move into the summer months and people start to feel a little more positive. The market isn’t static but it isn’t accelerating either.”
Dariusz Karpowicz, director at Albion Financial Advice:
“April saw a steady uptick in demand for residential properties, with the number of prospective buyers gradually increasing despite the challenges. Rising mortgage rates have certainly made prospective buyers and home movers more cautious, preventing many from stretching their budgets to the limit. To truly invigorate the market, substantial government intervention, perhaps in the form of new affordability schemes, is necessary to bridge the growing gap between property prices and average wages. Looking ahead for 2024, unless significant measures are introduced, we expect prices to continue their slow but upward trajectory.”
Andrew Montlake, managing director at Coreco:
“Most buyers now believe that house prices will continue to stabilise as the year progresses and any falls will be small and short-lived. Although we are in the middle of a period of rising mortgage rates and they are set to stay higher for longer, there is an expectation that as inflation finally falls a resultant slide in interest rates will see a deluge of buyers return to the market, further strengthening a housing market still short of supply. First-time buyers, who have never known lower interest rates and are seeing monthly mortgage costs similar to rental costs, are especially keen to find a property now, together with the canny buyer who knows there are deals to be had in market conditions such as these.”
Graham Cox, director at Self-Employed Mortgage Specialist SEMH:
“Demand has slowed down a little in March and April, as the negative impact of slowly rising mortgage rates has started to bite. With mixed signals around house prices, some vendors are pricing unrealistically high causing buyers to sit tight. It’s a stalemate which only lower house prices or mortgage rates will unlock. My best guess is property prices will likely fall 5% in 2024 unless the Bank of England cuts the base rate a few times this year.”
Sam Mitchell, CEO of Purplebricks:
“There is still positive sentiment from buyers and we are seeing viewing activity increase, signalling stability in the housing market.
“While several banks have slightly increased mortgage rates, there has also been an increase in new market offerings, both have sparked buyers into action which has resulted in more sales.
“The Bank of England has just announced mortgage rate approvals are at an all time high and people will want to capitalise on this.
“It’s harder for buyers in the South of England as relatively high rents and stamp duty costs and inflation make it extremely difficult for first time buyers save for a deposit to get on the property ladder.
“However, this trend, coupled with the continued preference for home working, has led to some strong activity in more affordable rural areas with good transport links to cities.”
Kate Steere, property expert at finder.com:
“Uncertainty around when the Bank of England will cut rates and by how much has dampened demand.
“Buyers are still struggling with affordability issues and several big lenders have increased their rates in the past week.
“It’s clear the market is still adjusting to the end of ultra-low mortgage deals, with millions of borrowers due to remortgage this year. Buyer demand remains subdued and, as a result, house prices have dipped slightly.
“A lot rides on the Bank of England’s actions over the coming months. However, half of experts believe we will have to wait a bit longer before we see rates cut.”
Karen Noye, mortgage expert at Quilter:
“The lack of momentum in the housing market appears to be having a knock-on effect on house prices.
“Nationwide’s latest house price index reveals house prices fell 0.4% month on month in April, while the annual rate of change also slowed to 0.6% down from 1.6% in March.
“House sales typically pick up in the spring, but ongoing affordability pressures appear to be dampening this trend this year.
“Given many lenders have upped their mortgage rates in recent weeks, we can expect this to continue and could see it translate into a further dip in house prices in the shorter term.
“Yesterday’s UK monthly property transactions data evidenced a continued stall in sales, and though we saw a minor 1% uptick in seasonally adjusted residential property transactions in March compared to February, rising to 84,200, this was still 6% lower than the level of transactions seen in the same period last year.
“Though the housing market is suffering a relatively subdued period at the moment, it may not last for too much longer as we could see a turning point during the summer months which could buoy house prices.
“The Bank of England is expected to announce its first interest rate cut later this year given inflation has continued making progress back down towards the Bank’s 2% target, falling to 3.2% in March.
“The prospect of a cut could translate into lower mortgage rates which could make moving home or taking the first step onto the property ladder more affordable and thus more attractive to prospective buyers who have been stuck in ‘wait and see’ mode.
“Despite the lull in house prices at present, the outlook for the housing market is starting to look a little more optimistic, particularly if the Bank of England cuts rates sooner rather than later.
“For those who are looking to purchase a property this year, it is important to seek professional mortgage advice to ensure you make the best possible decisions for your circumstances.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi:
“UK house prices increased by 0.6% annually in the year to April, falling month on month by 0.4%.
“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. 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 big hits, frequently 30-40%.
“It is unlikely that house prices will fall in coming months for several reasons. Firstly, housing demand is driven by necessity: we all need a roof over our heads. Secondly, many homeowners have no mortgage or need to sell at a price below valuations in previous years.
“Finally, with an election looming this is ever more relevant: no political party will put in place policies that risk harming house prices, as this is guaranteed to lose votes. For this reason, fears of a house price crash are over-blown, whether they come from home owners or elsewhere in the property market.”
