By James Simons-
The average UK house price experienced a modest rebound in May after two consecutive months of decline, signalling resilience in the market amidst ongoing affordability challenges, according to data from Nationwide Building Society.
House prices rose by 0.4% month-on-month in May, following a 0.4% decline in April. This increase brought the average house price to £264,249. On an annual basis, house price growth more than doubled to 1.3% in May, up from 0.6% in April.
AD: Capeesh Restaurant
Robert Gardner, Nationwide’s chief economist, commented on the market’s performance: “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer-term interest rates in recent months.”
Supporting this trend, HMRC data released on Friday showed a fourth consecutive monthly rise in house sales in April, with transactions increasing by 5% to 90,430. This uptick coincided with a reduction in the higher rate of capital gains tax for house sales.
However, the housing market faced challenges earlier in the year due to slight increases in mortgage rates. According to Moneyfacts, the average two-year fixed rate mortgage rose from 5.56% at the end of January to 5.92% by the end of May.
AD: Oysterian Sea Food Restaurant And Bar
Experts anticipate that the Bank of England may cut interest rates in August or September, as headline inflation eased to 2.3% in the 12 months to April 2024, down from 3.2% in the 12 months to March.
Mr. Gardner noted: “Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, added: “Higher house prices are themselves a barrier for many buyers, because when coupled with higher mortgage rates, the monthly payments are pushed out of reach.
Buyers are pushing through which owes an awful lot to people’s confidence in their own personal financial position – which Nationwide figures show has turned positive after years of negativity. The easing of inflation, coupled with robust wage growth, and relatively low levels of unemployment, mean people are feeling more secure.”
Earlier this week, a separate index by property website Zoopla revealed that Britain’s supply of homes for sale is at its highest level in eight years. Experts suggest this trend will limit house price increases for the remainder of 2024.
Nationwide’s research also indicated that the upcoming General Election is unlikely to significantly impact house prices. Historical data shows that previous elections have not affected underlying market trends, as buyers continued with their plans irrespective of political events.
Anna Clare Harper, chief executive of sustainable investment adviser GreenResi, remarked: “The question everybody is asking is what impact will the election – and its results – have on the property market. Elections make investors and aspiring homeowners nervous. However, the truth is that the results of the election are unlikely to make a material difference to house prices.”
Nathan Emerson, chief executive of Propertymark, added: “We are conscious there may be a potential slowdown across the summer as a knock-on effect following the General Election. But with inflation firmly on its journey downward and with scope for interest rate cuts, we may soon see a much welcome influx of highly competitive deals from lenders hit the marketplace.”
AD: Heritage And Restaurant Lounge Bar