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Property experts have been digesting Nationwide’s data showing a 0.4% drop in house prices last month.
Tom Bill, head of UK residential research at Knight Frank, agrees that rising mortgage costs are to blame:
“The house price growth seen in the first two months of this year is going into reverse as higher mortgage rates take their toll on demand. Borrowing costs have risen as a strong labour market means the prospect of a rate cut has become more remote.
There are added financial pressures in the system as a wave of owners roll off sub-2% mortgages agreed in early 2022.
“The uplift in market activity typically associated with spring was slightly delayed this year but became more evident over the course of April. Compared to March, we saw an increase in the number of London house hunters which also led to sellers feeling more confident about putting their property up for sale.
Still, demand continued to outweigh supply in April which gave the majority of sellers the upper hand during price negotiations.”
The lenders’ house price series can be volatile from month-to-month, particularly in times when transaction levels are relatively low, making it harder to mix-adjust the data.
Just as the apparent strength in January/February looked out-of-keeping with fundamentals, the latest data is unlikely to mark the start of a renewed fall in property prices.
