UK house price growth has accelerated to 3% annually in April, up from 2.2% in March, according to the latest data from Nationwide. The average UK house price now stands at £278,880, reflecting a 0.4% increase month on month after seasonal adjustment, signalling renewed momentum in the housing market despite ongoing economic uncertainties.

Market resilience amid global and domestic challenges

Robert Gardner, Nationwide’s chief economist, highlighted the surprising strength of the housing market given the recent geopolitical tensions in the Middle East and the associated rise in energy prices. He noted that the market has regained momentum following a slowdown earlier in the year, even as consumer confidence indicators have weakened noticeably.

Gardner attributed this resilience to the relative strength of household finances. He explained that household debt is currently at its lowest level relative to income for around two decades. Additionally, many households have built sizeable savings buffers in recent years, although these are not evenly distributed across all demographics.

Improved housing affordability supports demand

Gardner also pointed out that housing affordability had been steadily improving prior to recent interest rate rises. This improvement was driven by income growth outpacing house price increases and a modest decline in mortgage rates. Although market interest rates have risen in recent months, their impact on affordability has so far been limited, helping to sustain buyer activity.

Industry perspectives on current market trends

Nathan Emerson, CEO of Propertymark, emphasised that the ongoing price increases are largely due to constrained supply rather than a surge in demand. Limited stock levels in many areas mean that even modest buyer interest can push prices upward.

Marc von Grundherr, director at Benham and Reeves, described the current market as progressing steadily but without the urgency seen in previous years. He cautioned that while annual house price growth has picked up to 3%, the overall performance remains relatively modest.

Verona Frankish, CEO of Yopa, noted that despite a slowing rate of monthly house price growth, property values remain higher than both the previous month and the same period last year. She highlighted this as evidence of the UK property market’s strength amid a challenging economic and global environment.

Tom Bill, head of UK residential research at Knight Frank, suggested that the impact of rising mortgage rates on house prices will be gradual rather than sudden. He explained that offers made before recent conflicts are still progressing through the system, which has led Knight Frank to marginally downgrade its price forecasts for the year. Bill also emphasised the uncertainty surrounding the duration and escalation of the conflict and its inflationary consequences.

Jeremy Leaf, a north London estate agent and former RICS residential chairman, urged caution against writing off the housing market. He observed that Nationwide’s data shows prices holding up better than expected, particularly for houses, despite ongoing cost-of-living pressures including mortgage costs. Leaf noted that while the data covers the period up to the first month of the war in Iran, on-the-ground sentiment is increasingly realistic about the market’s prospects.

What this means for landlords

The sustained growth in house prices, supported by strong household finances and improving affordability, suggests a stable environment for UK landlords. Limited housing supply continues to underpin price resilience, which may help maintain rental demand and property values. However, landlords should remain mindful of the broader economic uncertainties, including potential inflationary pressures and mortgage cost fluctuations, which could influence market dynamics in the coming months.

Source: Based on reporting from Property118

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