UK house price growth slows as cost of living crisis begins to hit market | real estate market

House prices continued to rise in April, but the growth rate is slowing as rising inflation and the cost-of-living crisis begin to affect the market, figures show.

The average price paid for a home in the UK rose 0.3% in April to £267,620 month-on-month, Nationwide found, its ninth straight month of growth.

However, the rate of growth in house prices slowed from a 1.1% rise in March and is the smallest increase since September last year, according to the building society’s monthly housing index.

On an annual basis, house prices are up 12.1% yoy, a slight slowdown from 14.3% in March.

The boom was fueled by a shortage of housing stock and a pandemic-driven hunt by city dwellers for bigger homes, gardens and more rural living.

However, Nationwide believes the market will slow as household budgets tighten and mortgages become more expensive.

“It is surprising that conditions have remained so buoyant given the mounting pressure on household budgets that has severely hurt consumer confidence,” said Robert Gardner, chief economist at Nationwide.

“We continue to expect the housing market to slow down in the coming quarters. Pressure on household incomes is likely to intensify and inflation is likely to rise further, potentially reaching double digits in the coming quarters if global energy prices remain high.

“Assuming that labor market conditions remain strong, the Bank of England is likely to continue raising interest rates, which will also weigh on the market if that affects mortgage rates.”

The average price of a UK home has risen by nearly £50,000 since the coronavirus pandemic began in March 2020, according to Nationwide.

Given the changing conditions, it is noteworthy that a survey found that 38% of respondents said they were either in the process of moving or considering moving. The proportion was particularly high in London, where nearly half said they were moving or considering moving.

“The persistently hot real estate market is showing signs of cooling,” said Myron Jobson, senior personal finance analyst at Interactive Investor.

“Mortgage affordability is a growing concern. The cheap mortgage window is closing fast and the specter of higher interest rates means mortgage rates are likely to return to levels not seen in a while. The real estate market remains tough for homebuyers and is expected to get tougher from an affordability perspective.”


Nationwide said that despite increasing pressure on household finances, the proportion of people moving or considering moving was higher than during the peak of the pandemic in April last year.

“The survey results suggest that shifts in housing preferences as a result of the pandemic continue to support housing market activity, albeit to a lesser extent than at this point last year,” Gardner said.

About a quarter (24%) of those moving or considering moving said they would move to a larger property, about the same proportion as in April last year. However, the proportion of those who say they would like to escape the hustle and bustle of city life or have access to a garden or more outdoor space has fallen to 12% and 15% respectively, compared to 25% and 28% last April .

“Let’s face it, a growth slowdown from 14% to 12% is still an insane growth rate,” said Rhys Schofield, managing director at Peak Mortgages and Protection. “What we may see is some of the madness surrounding the rise in property prices abating.”

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In March, Nationwide said UK house prices had risen at their fastest pace since 2004, when the UK was enjoying a property boom before the financial crisis.

In October, the Office for Budget Responsibility (OBR), an independent body that prepares economic forecasts for the government, revised an estimate that house prices would fall this year.

The revised forecast says UK house price growth will slow to 3.2% this year and slow further to 0.9% in 2023.

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