House prices rise 0.5% in April after seven months of falls: Nationwide

House price growth saw "signs of stabilisation in April", according to the latest Nationwide house price index.

Annual house price growth remained negative in April at -2.7%, but improved from -3.1% in March, and there were tentative signs of a recovery with prices rising by 0.5% during the month. April’s monthly increase follows seven consecutive declines and leaves prices 4% below their August 2022 peak.

Robert Gardner, Nationwide's chief economist, said: “Recent Bank of England data suggests that housing market activity remained subdued in the opening months of 2023, with the number of mortgages approved for house purchase in February nearly 40% below the level prevailing a year ago, and around a third lower than pre-pandemic levels. However, in recent months industry data on mortgage applications point to signs of a pickup.

“This also chimes with the recent shifts in consumer sentiment. While confidence remains subdued by historic standards, people’s views of their own financial position over the next twelve months, and general economic conditions in the year ahead, have both improved markedly in recent months. If inflation falls sharply in the second half of the year, as most analysts expect, this would likely further bolster sentiment, especially if labour market conditions remain strong.

“This, in turn, would also be likely to support a modest recovery in housing market activity. But any upturn is likely to remain fairly pedestrian, as it will take time for household finances to recover, since average earnings have been failing to keep pace with inflation, and by a wide margin over the last few years. Mortgage interest rates are also likely to act as a headwind. While they are well below the highs seen in the wake of the mini-Budget last year, rates are still more than double the level prevailing a year ago.

“Nevertheless, if gains in nominal incomes remain solid (wage growth has been running at above 7% in the private sector), this, together with weak or declining house prices, will help improve housing affordability over time, especially if mortgage rates continue to trend lower.”

Jonathan Hopper, CEO of Garrington Property Finders, commented: “Settling mortgage rates haven’t yet reversed the correction in property prices, but they have returned some much-needed calm and pragmatism to the market.

“With average prices still falling in many areas, this is unquestionably a buyer’s market. Proceedable buyers who have their finances in place invariably hold a strong hand, with sellers fighting for their attention and often agreeing to a significant discount just to get a deal done.

“While all buyers remain price sensitive, the more pragmatic are taking an increasingly long-term view in their plans rather than agonising over how prices might change over the next month or two.

“Sales volumes are low and there was no spring bounce this year, but supply is slowly improving – helped by the many buy-to-let landlords selling off investment properties which no longer break even following the surge in interest rates.

“Nevertheless, things are far from back to normal. With inflation still in double digits, the Bank of England may increase interest rates again later this month – and this would push affordability further out of reach for more first-time buyers.

“But at the top end of the market, where buyers tend to be less reliant on mortgage borrowing, business is getting brisker as astute buyers capitalise on softer prices to secure favourable deals that would have been unthinkable a year ago.”

Nicky Stevenson, managing director at Fine & Country, added: “April’s small rise in house prices is a hugely positive sign, coming after Nationwide reported several months of falling prices even as other indices suggested the opposite was happening.

“The property market is proving much more resilient than people anticipated, even though household finances remain tight and inflation is still stubbornly high.

“Buyers have already accepted this new higher interest rate environment, and with mortgage rates remaining broadly stable for several months this is encouraging people back to the market.

“This boost in activity is also coinciding with growing stock levels, and with property transactions starting to tick up, these are great signs of increasing confidence in the property market.”