29th April 2015
House prices rose by 5.2% in April from a year earlier, but the pace of growth was slightly slower than last month’s figure of 5.1%.
The average house price was £193,048 in April, compared to £189,454 the same month last year.
Month-on-month, prices were up by 1% in April, which was the largest rise since June 2014.
Robert Gardner, Nationwide’s chief economist, says: “The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months. Indeed, the number of mortgage approvals is still well below its long run average and 20% below the levels recorded in early 2014.
“The strength of the economy and relatively subdued pace of activity in the housing market remains something of an anomaly. It is possible that heightened uncertainty ahead of the election is weighing on activity, though there is no compelling evidence from previous UK elections to suggest a strong impact.
“Healthy labour market conditions and continued low mortgage rates should help underpin housing demand in the quarters ahead.”
Drawing comparisons between the UK housing market, and that of the rest of the EU, Gardner points out that even though the UK is often characterised as a nation of home owners, the proportion of owner-occupiers is not particularly high compared with other countries. In fact he says it is actually towards the lower end of the range.
Gardner adds:“Although some other European nations have seen declines in their home ownership rates in recent years, the movement in the UK has been more pronounced. That said, even at its all-time high of 73% in 2007, the UK homeownership rate was not particularly high by EU standards. Since then, there has been significant growth in the private rental sector.
“Interestingly, while the UK home ownership rate may not be particularly high, the propensity for young adults (aged 18-34) to live with their parents is relatively low, a trend which has become more pronounced over the past five years.”
Analysis: The view from across the market
Jonathan Samuels, chief executive of Dragonfly Property Finance, says the 1% April price increase, is a little out of the blue and underlines the inherent volatility of the property market.
” It truly is a law unto itself. Does a strong economy and subdued pace of activity really constitute an anomaly? On paper it might, but in practice the property market is rarely that simple. While mortgages are cheap, employment high and the cost of living low, people are far more cautious than they were in the past. There is an element of caution, and conservatism, in the market that perhaps wasn’t there before 2008.
“The fact that first quarter economic growth wasn’t as strong as expected is certainly consistent with more subdued activity levels. People are more aware than ever that the property market is a double-edged sword. And prices overall are high. Buying a property is not a decision that can be taken lightly.
“We would expect activity levels to pick up after the General Election, particularly at the higher end of the market, but 2015 as a whole is shaping up to be a middling year for the market. But is this necessarily a bad thing?”
Howard Archer, chief UK and European economist at IHS Global Insight, says:”There are increasing signs that the housing market is now starting to firm after weakening appreciably through the second half of 2014.
“We expect housing market activity to gradually pick up over the coming months. Meanwhile, a current shortage of properties coming on to the market seems to be providing increasing support to house prices. Consequently, we expect house prices to rise by around 5% over 2015.”
Jeremy Duncombe, director, Legal & General Mortgage Club, says: “Although house price rises in recent months may seem subdued when compared to last year, prices are still rising well above the level of inflation. This is due to a surplus in demand which is outpacing the supply of new houses. This imbalance in the housing market has pushed up the average asking price in April, making homeownership a more distant dream for many potential buyers.
“It’s encouraging to see that political parties are talking about building more properties in the run up to the election. However, we need to ensure that house building remains at the top of the agenda throughout the next parliamentary term so a good supply of new properties is built and the issue is not forgotten about after the electioneering is over.”