Nationwide building society has reported that UK house prices increased by 0.5% in April, breaking a seven-month streak of declines.
The average price of a home rose from £257,122 in March to £260,441 last month. While there was a 2.7% decline compared to April 2022, it was a smaller drop than the 3.1% decrease seen in March.
Robert Gardner, the Chief Economist at Nationwide, said that the latest figures showed indications of a potential recovery, although property prices remain 4% below their August peak.
Bank Of England Data
Bank of England data revealed that the number of approved mortgages for house purchases was 40% lower in February. This is compared to the previous year and a third less than pre-pandemic levels. Nevertheless, the industry data on mortgage applications suggests an uptick in recent months.
“This chimes with recent shifts in consumer sentiment,” he said. “While confidence remains subdued by historic standards, people’s views of their own financial position over the next 12 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 and the Bank of England expect, this would further boost confidence. Especially if job market conditions remain strong.
Unemployment has remained relatively low despite the economic slowdown.”
“This, in turn, would also be likely to support a modest recovery in housing market activity.” Gardner said. “But any upturn is likely to remain fairly pedestrian, as it will take time for household finances to recover, since average earnings have been failing to keep pace with inflation, and by a wide margin over the last few years.”
Although mortgage interest rates are currently lower than the high levels observed after the mini-budget that was considered disastrous by some, they are still more than twice as high as the rates from a year ago.
The Bank of England has rapidly increased interest rates. This is with 11 rises in a row to 4.25%, in an attempt to curb inflation of above 10%.
Market analysts anticipate that policymakers will increase rates by 0.25% to 4.5% during their upcoming meeting.
