The UK housing market is showing “somewhat surprising” momentum, with annual house price growth accelerating in April, pushing the average property value to a fresh record high, according to Britain’s biggest building society.
The average house price increased by 3.0% annually in April, accelerating from 2.2% annual growth in March, Nationwide Building Society said.
Property values increased by 0.4% on average month-on-month in April, taking the typical UK house price to £278,880 – a new record high in cash terms.
Robert Gardner, Nationwide’s chief economist, said: “Despite the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices, the UK housing market has continued to regain momentum following the slowdown recorded around the turn of the year.”
“This is somewhat surprising given that indicators of consumer confidence have weakened noticeably.”
Mr Gardner added: “The market is likely being supported by the relative strength of household finances.
“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.
“Moreover, housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in mortgage rates.
“While market interest rates have risen in recent months, the impact on affordability has so far been limited.
“Indeed, swap rates, which underpin fixed‑rate mortgage pricing, remain well below the highs reached in 2023 and are broadly in line with levels prevailing in late‑2024, implying only a partial reversal of earlier gains.”
Looking ahead, Mr Gardner said that UK economic growth is likely to be “somewhat weaker and inflation higher than previously expected as a result of developments in the Middle East, although the ultimate impact will depend critically on the duration of the shock and the policy response”.
He added: “However, the UK economy and housing market have proved remarkably resilient in recent years.
“This provides some confidence that, 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.”
On Thursday, the Bank of England base rate was held at 3.75%.
The Bank’s Monetary Policy Committee (MPC) said it had decided to hold borrowing costs steady but that it was alert to the evolving situation in the Middle East.
