UK house prices increase for the first time in seven months

According to the Nationwide building society house prices unexpectedly rose by 0.5% for the first time since August 2022.  

Figures, which were revealed yesterday, displayed that the cost of an average home increased by 0.5% between March and April, ending seven consecutive months of decline and beating analysts’ forecasts of a 0.4% decrease.

The average house price rose to £260,400 in April and whilst this is a major decrease from the £274,000 peak from August last year, it is still over £40,000 above the level in February 2020, before the beginning of COVID-19 restrictions. This reflects the boom in the market which was encouraged by record-low interest rates, making properties unaffordable for many households.

Reasons for a major increase in mortgage rates came after former Chancellor, Kwasi Kwarteng, promised billions of pounds of tax cuts without explaining how they would be paid for in September last year. It scared financial markets and drove mortgage rates up to a 14-year high.

However, Robert Gardner, Nationwide’s Chief Economist, said the number of mortgage’s being picked up has increased and households feel more confident about their finances.

Mr Gardner said: ‘If inflation falls sharply in the second half of the year, as most analysts except, this would likely further bolster sentiment. This, in turn, would also be likely to support a modest recovery in housing market activity.’

Alongside Mr Gardner’s positive approach, ensuring a steady wage growth in line with inflation rates and easing mortgage rates could help the housing market. However, a number of economists have warned that April’s rise in price was unlikely to be the start of a significant rebound.

Samuel Mather-Holgate, from the advisory firm Mather and Murray Financial, said: ‘The housing market always sees a boost in the spring, but don’t confuse this data with the green shots of recovery.

‘The annual figure is still down and this is expected to get worse over the next few months, especially if the central bank increases rates again this month.’

Although, Tomer Aboody, Director of property lender MT Finance, said: ‘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.’

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