House prices fall for the second month in a row

House prices fell by 0.4% in April to £261,962, following a 0.2% drop in March.

UK house prices declined for the second consecutive month in April, influenced by uncertainties around interest rates and rising mortgage costs, which impact the traditional spring home buying season. According to the Nationwide Building Society, April’s average house price fell by 0.4% to £261,962, following a 0.2% drop in March. This reduction marks a decrease of £11,700 since August 2022.  

Nationwide’s index showed that annual house price growth slowed to 0.6% in April from 1.6% in March. This trend placed additional pressure on the Bank of England ahead of its 9 May interest rate announcement. At the beginning of May, major banks such as Barclays, HSBC and NatWest raised their fixed mortgage rates, and Nationwide increased some rates by up to 0.25 percentage points. The average new two-year fixed mortgage rate has risen to 5.91%.

The housing market has shown signs of cooling despite expecting a bank interest rate cut later this year, possibly as early as June but more likely around August or September. However, mortgage approvals peaked in March, reaching a high not seen since September 2022.

A Nationwide survey revealed that 49% of prospective first-time buyers have postponed their purchasing plans in the past year due to high house prices and increased mortgage costs. Additionally, 53% cited high house prices as a deterrent, while rising mortgage expenses hindered 41%. Despite these challenges, 55% of respondents were open to buying in less-expensive regions to afford a bigger home.

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