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House price growth returns as activity remains slow

Written by: Owain Thomas
House prices returned to modest growth in April by bucking two months of falls, according to the Nationwide House Price Index.

The lender’s seasonally adjusted data showed a rise of 0.2% in April and there was a slight pick-up in annual house price growth to 2.6%, from 2.1% in March.

However, the report was otherwise subdued, noting that housing market activity remained generally weak.

It agreed that surveyors were seeing fewer enquiries and new instructions, adding that it expected house price growth to be limited to around 1% this year.

Nationwide chief economist, Robert Gardner, said: “February saw a softening in house purchase approvals to 64,000 cases, following a surprise rise in January. These figures are broadly in line with our expectations and close to the average for the last three months of 2017.

“Surveyors continue to report subdued levels of new buyer enquiries and recent months have also seen a softening in new instructions.”

Gardner highlighted that future activity would largely depend on how broader economic conditions evolved, especially in the labour market and interest rates.

“Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year.

“We continue to expect house prices to rise by around 1% over the course of 2018,” he said

Slower spring market

Mortgage Advice Bureau head of lending Brian Murphy suggested the modest growth reflected a robust market in the first four months of this year that was performing in line with analyst predictions.

“Up until the latest inflation figures were released, we also had the prospect of an imminent Bank of England base rate rise which may have been a contributing factor to a slower spring market, however given Mark Carney’s comments this now may be not be quite so immediate,” he said.

“Throw in one of the worst late winters we’ve seen for a long time, which impacted buyer activity, and it’s not difficult to arrive at the conclusion that actually, the fact that house price growth returned a positive reading last month at all is really quite positive, and suggests that, for the moment at least, the UK property market remains resilient.”

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