UK house prices increased for their second consecutive month in April, according to the latest official figures, as the housing market continues to show signs of recovery amid improving economic conditions.
The average UK house price increased by 1.1% in the 12 months to April, according to a provisional estimate from the Office for National Statistics (ONS).
This figure accelerated from 0.9% annual growth in the year to March and marked the second month in a row with an annual increase, after eight straight months of declines.
Sentiment in the housing market has shown signs of improvement this year despite mortgage rate remaining elevated and the Bank of England continuing to hold interest rates at 5.25%.
Separate data from the ONS yesterday revealed inflation returned to the government’s 2% target in May for the first time since July 2021.
However, the central bank is still expected to wait until at least August to cut interest rates. Its next meeting is scheduled this morning.
The ONS said house prices rose by 0.6% in England, 0.4% in Wales and 4.5 per cent in Scotland in the year to April.
The data also showed that average UK private rents increased by 8.7% in the 12 months to May, slowing from an 8.9% increase in April – which came after a rise of 9.2% in March.
Industry reactions:
Jason Tebb, president of OnTheMarket, commented: “Property prices and transactions continue to pick up month-on-month, with buyers and sellers alike appearing relatively unconcerned about the impending election.
Our data shows that seller sentiment remains steady, while buyer confidence has improved significantly, with the latter finding themselves in a stronger position as more stock becomes available. Inflation hitting its 2 per cent target should boost that confidence further, fuelling hopes that the Bank of England will cut rates by the end of the summer.
However, affordability constraints remain an issue for borrowers after many rates rises over the past couple of years, with buyers negotiating hard on price. Sellers should take advice from their local agent and price accordingly if they wish to take advantage of the uptick in activity and interest.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “Modest but healthy levels of growth seems to be the picture of house prices currently, bringing some much-needed stability to the property market.
“This period of calm is an opportunity for both buyers and sellers alike. Sellers can benefit from continued strong buyer demand, while a more balanced market may offer better value for buyers, particularly those looking to own their first home.
“There are clear differences on a regional basis, with areas like the North West seeing strong growth of nearly 4%, compared with London’s decrease by a similar amount.
“While mortgage approvals dipped slightly in April, the overall number of transactions remains higher year-on-year, suggesting a market with continued momentum.
“The next government needs to work together with industry stakeholders to address the ongoing challenges facing the industry. Policies that increase housing supply, enhance affordability, and promote transparency will benefit buyers, sellers and estate agents.
“The Guild remains cautiously optimistic about the outlook of the housing market for the remainder of the year. Strong buyer demand, alongside a slowdown in house price volatility, will help to keep the industry seeing robust growth.”
Nicky Stevenson, managing director at Fine & Country, commented: “The weather was blamed for the economy flatlining in April, but the rain didn’t dampen buyers’ spirits, with house prices remaining resilient.
“After so many buyers paused their house-buying plans towards the end of 2023, stable interest rates and the prospect of a reduction this summer has been enough to instil confidence, with many people committing to a move.
“Transaction levels up 10% year-on-year in April indicate a property market revived by easing household financial pressures.
“Meanwhile, reports this morning also reveal that the consumer prices index measure stood at 2% in May — in line with the government’s target for controlling inflation.
“As we expect the economic landscape to continue improving, it’s likely that we will see a spike in activity as the year progresses, especially with an interest rate cut from the Bank of England on the horizon.
“This would positively affect home buyers by making mortgages more affordable, increasing consumers’ spending power and helping them to get their desired properties more easily.”
Nick Leeming, chairman of Jackson-Stops, said: “Today’s data reveals a modest Spring bounce, with house prices increasing slightly across the UK. While slight, the price growth demonstrates that the UK’s housing market remains competitive, despite higher mortgage rates and economic headwinds. Buyers appear undeterred, likely spurred by lifestyle factors, job changes, and the desire to lock in purchases ahead of potential further price appreciation down the line.
“Despite gloomy weather so far this year, vendors are still driven to get their homes on the market. At Jackson-Stops, we’ve witnessed this momentum firsthand with an 18% uptick in new property listings hitting the market, as vendors look to take advantage of robust buyer demand. The expanding inventory provides much-needed supply for buyers who have been hampered by limited choices over the past few years and signals a step-change in the market – vendors now need to be competitive with their listing price to standout.
“Regional hotspots for Jackson-Stops such as Chipping Campden, Midhurst and Sevenoaks saw a significant uptick in new buyer enquiries, demonstrating the demand for homes in popular commuter towns and rural hubs across England.
“It’s worth noting that the general election had not yet been announced during this period, so next month’s figures will reflect the impact of political change. However, early indicators from the Jackson-Stops network suggest that the election has had little impact on buyer and vendor sentiment. Life’s pivotal moments continue to drive housing transactions regardless of the political climate. The “must-move” market persists, while activity at the higher end has gained momentum.”
Nathan Emerson, CEO of Propertymark, noted: “The impact of what has been a challenging economic period continues to play chaos for many renters. Not only are personal finances stretched to the max for many people, but we have the added uncertainty of a general election and what that might ultimately mean for renters and landlords. All major political parties have referenced the need for building much-needed new homes, but we need to see a precise plan and timeline as to how and when that is going to happen. Currently, demand is continuing to seriously outstrip supply, and this remains a major contributary factor to elevated rental prices across the board.”
Malcolm Webb, technical director, Legal & General Surveying Services, added: “While we wait for the sun to make an appearance, it is encouraging to see the mortgage market heating up. Inflation has met the 2% target, and despite tangible affordability challenges, we are still seeing strong demand across the board, particularly from first-time buyers. But make no mistake – in the current market, getting independent expert advice is the best way to filter out the noise and find the best product for your needs and circumstances.”
