House prices rise but sales and mortgage approvals struggle

house prices

It is the first time that average house prices rose on a monthly basis since February 2024

House prices appear to have benefited from a Spring bounce but sales and mortgage approvals have struggled.

It comes after a busy day for property market data last Friday saw the release of the latest Nationwide House Price Index for May as well as BoE mortgage approval figures and HMRC transaction data for April.

Nationwide’s latest House Price Index suggests Index shows average house prices increased by 0.4% in May to £264,249.

It is the first time that average house prices rose on a monthly basis since February 2024.

Average values were also 1.3% higher and typical prices are now back to levels seen in November 2022, just after the mini-Budget.

The lender suggested confidence is returning to the property market due to high wage growth and slowing inflation.

Its chief economist Robert Gardner added that the General Election should not affect the housing market.

Gardner noted: Past general elections do not seem to have generated volatility in house prices or resulted in a considerable change in house price trends.

2019 is a notable exception, but this was because of the impact of the pandemic, with the initial lockdown in 2020 suppressing housing market activity. Activity subsequently rebounded once restrictions began to be lifted, he said.

It seems that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most homebuyers, elections are not foremost in their minds while buying or selling property, he added.

Meanwhile, HMRC property data shows the provisional seasonally adjusted estimate of the number of UK residential transactions in April 2024 is 90,430, 10% higher than April 2023 and 5% higher than March 2024.

On a non-seasonally-adjusted basis, sales were 17% higher annually but 9% lower on a monthly basis.

These figures may reflect activity from earlier this year when mortgage rates were down.

Mortgage pricing has risen in recent months, putting pressure on buyer budgets, and that appears to be reflected in BoE figures.

The BoE recorded 61,140 mortgage approvals for house purchase in April, down slightly from 61,263 in March.

They were still higher than the 48,587 recorded in April 2023.

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said: The fact mortgage approvals were flat in April shows how stubborn inflation delayed a rate cut while rain deferred the start of the Spring market.

He added: Meanwhile, transaction volumes rose thanks to more listings, especially in the early weeks of the year when inflation forecasts were more optimistic. Sales were still 12% below their five-year average but should hold up this year despite the July election. We expect average UK prices to increase by 3% in 2024 as a rate cut moves onto the horizon this summer.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Invest for Property. The information provided on Invest for Property is intended for informational purposes only. Invest for Property is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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