FX.co ★ UK House Prices Unexpectedly Fall

The UK housing market witnessed an unexpected drop in prices for the month of April. This was primarily due to the pressure on affordability, especially in light of the surge in long-term interest rates. This information was disclosed by the Nationwide Building Society.

The drop in house prices for the month was recorded at 0.4%, following a 0.2% decrease in March. Analysts had predicted a 0.1% increase instead. On a yearly basis, the growth rate of house prices decreased to 0.6%. The rate in March was higher, at 1.6%, and an increase to 1.2% had been forecasted.

The Chief Economist at Nationwide, Robert Gardner, attributed the slowdown to increasing affordability issues. Recent months have seen a rise in long-term interest rates, reversing the steep fall observed at the beginning of the year. According to Gardner, house prices in the summer of 2022 were roughly 4% higher than the current prices.

A study spearheaded by Censuswide for Nationwide showed that nearly half of future first-time home buyers have put off their plans due to escalating house prices and increased mortgage costs. Out of these, 84% reported that their buying decisions were influenced by the cost of living. The study also found that 55% of respondents were open to buying in a different part of the country where the housing market is cheaper or the properties are larger.

In contrast, recent official data presented a positive outlook. Mortgage approvals in March reached a peak of 61,300, the highest in the past 18 months. Furthermore, the Bank of England has maintained an unchanged interest rate of 5.25% over their past five consecutive meetings, a level unparalleled since 2008.