House costs RISE in April as property market regains momentum regardless of headwinds

House prices went up by more than expected in April, as Britons use savings to shore themselves up against economic uncertainty. 

The average cost of a home went up by 3 per cent in the twelve months to April, according to Nationwide Building Society, as the market gained momentum following a 2.2 per cent rise in March. 

The typical property is now worth £278,880 according to the mutual, up from £277,186 in March which is an 0.4 per cent monthly increase. 

Nationwide’s chief economist, Robert Gardener, said the rise was ‘surprising’ because other indicators suggested consumer confidence had taken a hit because of the war in the Middle East. 

Mortgage rates have risen sharply since the conflict began, making it more expensive to own a home, though lenders are now beginning to slowly reduce them. 

The average two-year fix has risen from 4.83 per cent at the start of March to 5.67 per cent today, according to Moneyfacts. 

Rise: Nationwide said prices went up by 3% in the year to April despite uncertainty

But Gardener said that wealthier households had low levels of debt and money stashed away in savings, which made them feel more confident about buying a property despite the precarious economy. 

‘The market is likely being supported by the relative strength of household finances,’ he said.

‘In aggregate, household debt is at its lowest level relative to income for around two decades, and sizeable savings buffers have been built up in recent years, although these have not been evenly distributed across households.’

House prices have also been slower in recent years, following sharp rises during the pandemic. This means buying a first home or moving up the ladder is more affordable for some. 

The UK is likely to face rising inflation and lower growth as a result of the Iran war and its impact on energy prices, which could dampen the housing market. 

However, Gardener said the effects would depend on how long the conflict went on. 

He added: ‘The ultimate impact will depend critically on the duration of the shock and the policy response.

‘If the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived.’

It remains a buyers’ market, however, with more properties up for sale than buyers who want to fill them. 

Jason Tebb, President of property listings website OnTheMarket, said: ‘Despite the challenging economic backdrop, the housing market continues to demonstrate the resilience it has become known for. 

‘Focused buyers are price-sensitive and negotiating hard, while sellers realise that they will struggle to sell over-priced homes.’

The Bank of England left interest rates on hold at 3.75 per cent yesterday, which means mortgage rates should remain relatively stable for now.