UK house prices rose for a ninth consecutive month in April as the housing market continued to defy an escalating cost of living crisis.
The 0.3 per cent gain marked the longest winning streak since 2016 and lifted the average price of a home to a record £267,620 (€316,000) , according to a survey by Nationwide Building Society. Values were 12.1 peer cent higher than a year earlier.
The surge has been driven by a shortage of homes for sale and pandemic-driven demand for larger properties away from urban centers. However, Nationwide warned the mounting pressure on consumer spending power, with energy bills soaring and inflation at a 30-year high, is almost certain to slow momentum.
“We continue to expect the housing market to slow in the quarters ahead,” Robert Gardner, chief economist at Nationwide, said in a statement on Friday. “The squeeze on household incomes is set to intensify.”
The growth in April was short of the 0.8 per cent gain expected by economists, and the annual pace of house price inflation slowed from 14.3 per cent in March.
Market
Other headwinds facing the market include stretched affordability for first-time buyers and the prospect of further interest-rate increases from the Bank of England as it battles to bring down inflation.
In a sign of potential trouble for the housing market, a BOE survey carried out in March found banks planned to significantly scale back mortgage lending amid fears that borrowers could start to default on their debts.
“It’s surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence,” Gardner said. “Consumers’ expectations of their own personal finances over the next 12 months has dropped to levels last seen during the depths of the global financial crisis more than a decade ago.”
A typical home has jumped almost 52,000 pounds since the pandemic struck in early 2020, a 22 per cent jump in prices. Nationwide also cited savings built up during the pandemic and a buoyant labor market as factors underpinning the market.
The increase has been led by rural areas such Wales and Southwest England, while London trailed behind. – Bloomberg
