Some property experts have suggested that optimistic house price figures may be masking a deterioration in market conditions.
Over the weekend the Nationwide Building Society released its latest monthly index, showing price rose 3% in the year to April, up from 2.2% in March. And it said that on a monthly basis, prices increased by 0.4% – bucking many analysts’ expectations.
Meanwhile Zoopla’s latest index released at the end of last week shows prices up 1.3% on the year across the UK.
However, some experts suggest an analysis of house prices may not show the market exactly as it is today.
Gareth Lewis, deputy chief executive of lender MT Finance, says in response to the Nationwide data: “One wonders where they get these figures from when we are seeing values under pressure and a significant volume coming in lower than anticipated.
“As these prices were negotiated a few months ago, this may be why the figures aren’t reflecting a softening market. But from a lending perspective we are seeing valuers cautious on value while buyers are looking for a steal and prepared to negotiate on price.”
Chris Hodgkinson, managing director of House Buyer Bureau, says there is a “disconnect” between prices and market activity.
“While house prices have edged up, the reality on the ground is that the market continues to stagnate. Buyer demand has cooled, sellers are sitting on the market for longer and we’re seeing more transactions fall through as uncertainty continues to weigh on sentiment.
“This disconnect between price growth and market activity highlights the fragile nature of current conditions and, without a meaningful improvement in affordability, it’s likely that this subdued level of performance will persist in the near term.”
And Charlotte Harrison of the Skipton Building Society comments: “The resilience we’re seeing in the housing market is encouraging, particularly given ongoing economic uncertainty. However, this headline stability masks very different realities depending on where people live and their stage of life.
“While there are signs that affordability is improving slightly, the latest Skipton Group Home Affordability Index shows that many first‑time buyers remain under significant pressure.
“… Regional differences are increasingly stark, with average first‑time buyer deposits equivalent to 140% of household income in London, double the level seen in the North.”
Camilla Dell, managing partner at London-focussed buying agency Black Brick, says: “It may be happening thousands of miles away, but the ongoing conflict in the Middle East is making itself felt in London’s housing market – deals are down, reductions up.
“Experts believe that the long-awaited revival of Prime Central London (PCL), has been kicked into the long grass.”
Many responses to recent house price figures suggest that at best, they reflect UK housing market activity in the first weeks of the Iran War, well before it became clear that the conflict will be lengthy.
Tom Bill, head of UK residential research at Knight Frank, sees it this way: “The impact of rising mortgage rates on house prices will be more gradual than sudden, as offers that pre-date the conflict work their way through the system.
“[This] is why we have downgraded our price forecasts for this year marginally.
“Borrowing costs have been volatile in recent weeks, underlining the high degree of uncertainty that exists over how long the war lasts, to what extent it escalates and the impact of second round effects on inflation.”
The weekend’s figures from Nationwide show that UK annual house price growth picked up to 3.0% in April, from 2.2% in March. Prices increased by 0.4% month on month, after taking account of seasonal effects.
Even Nationwide’s chief economist, Robert Gardner, seems surprised at the data. He says: “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.
“GfK’s headline index has fallen to its lowest level since late‑2023, reflecting households’ more pessimistic views of the economic outlook and their own financial position over the year ahead.
“Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023. This softening is likely to have been influenced by higher market interest rates following the onset of the conflict, alongside a more uncertain backdrop.”
