UK House Prices Fall Unexpectedly | Nationwide Blames April Slowdown

UK house prices fall unexpectedly for second month in a row. Nationwide blames April slowdown on ‘affordability pressures’ due to high mortgage rates.

UK house prices have experienced an unexpected decline in April for the second consecutive month, as reported by the building society Nationwide. Factors such as uncertainty surrounding interest rates and the rising cost of mortgages have contributed to a subdued spring homebuying season. Economists are beginning to view the two consecutive monthly drops in the Nationwide index as a concerning trend, especially with fixed mortgage rates on the rise. The average house price in April stood at £261,962, marking a 0.4% decrease from March. This decline has brought the value of a typical UK home down by £11,700 since August 2022, just before Liz Truss's controversial mini-budget.

Nationwide's data also revealed a decrease in the rate of annual house price growth, dropping to 0.6% in April from 1.6% the previous month. Major lenders such as Barclays, HSBC, and NatWest responded to the shifting economic landscape by increasing rates on their fixed mortgage deals. This trend continued as Nationwide raised some of its fixed rates by up to 0.25 percentage points, while the average new two-year fixed mortgage rate climbed to 5.91% according to Moneyfacts.

The Bank of England is anticipated to announce an interest rate cut later this year, with differing opinions among economists on the timing of this decision. The Nationwide analysis highlighted a moderation in the recent uptick in housing market activity, despite a rise in mortgage approvals in March. A survey commissioned by Nationwide revealed that nearly half of first-time buyers planning to enter the property market within the next five years had postponed their plans in the past year. The main reasons cited for delaying home purchases were high house prices and increased mortgage costs.

Among those surveyed, a majority expressed willingness to explore buying options in regions with lower property prices or larger homes. This shift in buyer behavior reflects the challenges posed by the current housing market conditions. As the Bank of England navigates these economic uncertainties, the future trajectory of UK house prices remains uncertain.

The recent decline in UK house prices, coupled with the ongoing fluctuations in mortgage rates, underscores the challenges faced by prospective homebuyers in the current market. The decision-making process for first-time buyers is influenced by a complex interplay of factors, including affordability and market conditions. As the Bank of England prepares to make key interest rate decisions, the housing market will continue to be closely monitored for further developments.