Annual growth in house prices slowed slightly in April, according to new data from the Nationwide Building Society.
The 12.1% growth rate marked the 11th consecutive month in which annual house price growth remained in double digits, although slightly lower than the 14.3% growth in March.
Property values increased by 0.3% per month, which means that the average price of housing in the United Kingdom in April was £ 267,620.
Robert Gardner, chief economist at Nationwide, said: “Housing market activity remains stable, with mortgage approvals continuing to exceed pre-Covid levels.
“Demand is supported by stable labor market conditions, where employment growth remains strong and unemployment has fallen to pre-pandemic levels. As the stock of housing on the market is still low, this has led to continued upward pressure on housing. prices.
“However, it is surprising that conditions remain so favorable, given the growing pressure on household budgets, which has seriously damaged consumer confidence.”
“Rising house prices will continue to slow from here”
Gabriela Dickens, a senior British economist at Pantheon Macroeconomics, said the slowdown was not “surprising, given that real incomes have fallen sharply and mortgage rates have risen”.
“We believe that house prices will continue to slow from now on,” she added, noting that mortgage rates are likely to continue to rise and real disposable incomes appear to decline further, both in the face of high inflation. and the higher tax burden.
Martin Beck, EY ITEM Club’s chief economic adviser, agreed, saying: “The slower pace of rising house prices may be a taste of what’s to come.
“Pressure on real incomes from high inflation means that fewer people will be able to afford to borrow the amount they need to buy at higher mortgage rates.”
But he noted that “as during the pandemic, the housing market is likely to be relatively immune to economic challenges,” adding: “So while it is likely a period of relatively slow price growth, EY ITEM Club considers any major adjustment in property values are unlikely. “
“The affordability of mortgages is a growing concern”
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The affordability of mortgages is a growing concern.
“The window for cheap mortgages is closing fast, and the specter of higher interest rates means that mortgage interest rates are likely to return to levels we haven’t seen in a while.
“Higher interest rates on mortgages also mean that fewer homeowners are able to refinance to save money by getting a lower interest rate.
“However, the rapid rise in mortgage interest rates could undo the jump in property values, forcing homeowners to step back a bit. The hot question is: when will this happen?”
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