Robert Gardner, Nationwide's Chief Economist, commented on the figures: “There was a slight pickup in UK annual house growth in April to 2.6%, from 2.1% in March. House prices rose by 0.2% over the month, after taking account of seasonal factors.
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.
Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to 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.
What’s happening with cash buyers?
The share of cash transactions has declined a little over the past eighteen months. This is due in part to the introduction of the additional stamp duty levy on second properties which has impacted the purchase of second homes and rental properties, a large proportion of which tend to be conducted in cash.
Nevertheless, cash buyers continue to play an important role in the housing market, accounting for around a third of transactions.
The significant increase in the share of cash purchases in 2008 was a function of the sharp decline in mortgage transactions, rather than cash transactions increasing. This reflected the impact of tightening credit conditions during the financial crisis and the deterioration in labour market conditions, which reduced the number of people able to buy with a mortgage, while such constraints would have had less of an impact on cash purchasers."
As ever, the market was quick to react. Here's what they're saying:
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "The small increase in house price growth is probably more to do with a lack of supply rather than a burst of springtime activity. Nevertheless, a rise is more welcome than a fall and in line with other recent statistics shows that the market is continuing to follow a slow upward path, albeit without any fireworks.
Looking forward, we don’t expect a huge change but we are seeing an increase in valuations and listings which is likely to show itself in a little bit more activity over the coming months."
Jonathan Samuels, CEO of the property lender, Octane Capital, comments: "The 0.2% rise in April negates March's drop and neatly symbolises a market that lacks momentum.
While the annual rate of growth has nudged up slightly, it's unlikely to break out of the very low single digit bracket in 2018. At the same time, low stock levels and continued cheap borrowing rates mean that while the market is cooling in parts of the country, above all the capital, prices will not collapse.
While inflation has fallen and a rate rise next month is no longer the dead cert many had it down as, households still feel squeezed and transaction levels remain low. The high inflation and low wage growth we've endured will take time to work itself out of the system.
It's certainly no surprise that London is below the average for cash purchases given the cost of homes in the capital. Very few people in London have the financial firepower to buy a property outright in hard cash."
Lucy Pendleton, founder director of independent estate agents James Pendleton, said: “The market is traditionally in full swing at this time of year so a softening of approvals and new-buyer enquiries is entirely in line with Nationwide’s predictions for 2018.
This time last year this index had dropped for a second month and was to go on to fall again in May with Nationwide saying the market was losing momentum. Fast forward to the beginning for 2018 and they have been proved entirely correct, though certain government measures have increased buying pressure causing a much-needed slow-down and the close of a sellers’ market to drag on.
Annual gains show growth but in comparison with inflation, loss of momentum has already turned to house price falls in real terms. The race with inflation for April will be a close run thing with CPI having posted 2.5% in March. We won’t find this out until the next CPI measure comes out in May.
Longer term, Nationwide was expecting the market to grow about 1% this year so the flat price movement we’re seeing reflects that unremarkable outlook and we’re due some further contraction if they are to be proved right once again.”
Russell Quirk, founder and CEO of Emoov.co.uk, commented: "After two consecutive months of declining price growth, yet another industry source is reporting a positive uplift in house prices. With mortgage affordability coupled with an influx of stock and a seasonal uplift in buyer demand, it’s extremely likely that the market uncertainty caused by previous political influences will now evaporate in the spring sunshine with a renewed optimism in the market.
Those that have been considering a property sale or purchase but have remained on the fence due to wider market conditions, should be reassured that the market has turned a corner and will continue to do throughout the remainder of the year."
