(qlmbusinessnews.com Thurs. 2nd May, 2024) London, UK —
“Nationwide's Latest Report: UK House Prices Dip for Second Consecutive Month”
House prices in the UK have taken an unexpected downturn for the second consecutive month in April, as reported by the building society Nationwide. The decline, attributed to “affordability pressures” stemming from high mortgage rates and interest rate uncertainty, has cast a shadow over the usual spring homebuying surge.
The average house price for April stood at £261,962, marking a 0.4% decrease compared to March. This follows a 0.2% drop recorded the previous month, hinting at a concerning trend according to some economists. Additionally, the annual house price growth rate fell from 1.6% to 0.6% in April, indicating a broader slowdown in the market.
Robert Gardner, chief economist at Nationwide, highlighted the role of rising longer-term interest rates in contributing to the ongoing affordability challenges faced by prospective buyers. The current prices are approximately 4% lower than the peak observed in the summer of 2022, factoring in seasonal adjustments.
Major lenders such as Barclays, HSBC, and NatWest responded to the changing landscape by raising rates on their fixed mortgage deals. Nationwide also increased some of its fixed rates by up to 0.25 percentage points. The average new two-year fixed mortgage rate now stands at 5.91%, according to Moneyfacts.
While there is anticipation regarding a potential interest rate cut by the Bank of England later this year, the timing remains uncertain. Tom Bill, head of UK residential research at Knight Frank, noted that higher mortgage rates are already impacting demand, causing a reversal in the early-year house price growth.
Despite the current downturn, Nationwide's survey reveals that demand remains resilient, with mortgage approvals reaching their highest level since September 2022 in March. However, nearly half of prospective first-time buyers surveyed admitted to delaying their plans, citing high house prices and increased mortgage costs as primary concerns.
Tomer Aboody, director of property lender MT Finance, emphasized the need for stability and support in the housing market amidst affordability challenges and economic uncertainties. Whether through interest rate adjustments, mortgage flexibility, or potential policy reforms, buyers seek reassurance to navigate the evolving landscape confidently.
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