While UK house prices edged up 0.2 per cent this month, the annual rate of house price growth moderated to 4.9 per cent, from 5.7 per cent in March, according to Nationwide’s latest index.
The lender’s chief economist Robert Gardner explained this slowdown has returned the annual pace of house price growth to the fairly narrow range between 3 and 5 per cent that had been prevailing since the summer of 2015.
| Headlines | April 2016 | March 2016 |
| Monthly index | 402.5 | 401.5 |
| Monthly change | 0.2% | 0.7% |
| Annual change | 4.9% | 5.7% |
| Average price (not seasonally adjusted) | £202,435 | £200,251 |
As has been widely reported, a surge in house purchase activity resulting from the increase in stamp duty on second homes from 1 April provided a temporary boost to prices in March.
“However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,” noted Mr Gardner.
There were 165,400 transactions in March, an all-time high, some 11 per cent higher than the previous peak of around 149,000 recorded in January 2007.
“Buy-to-let has accounted for an unusually high share of lending in recent months, at circa 19 per cent of lending in the three months to February, but the strength of activity suggests its share could surpass 25 per cent in March,” stated Mr Gardner.
“Viewing the transactions and mortgage lending data together suggests that, while buy-to-let lending is likely to have risen strongly in March, a large proportion of the boost to house purchase activity came from cash buyers.”
Mark Posniak, managing director at Dragonfly Property Finance, said after such a “mad March” a house price hangover in April was almost inevitable.
“There’s a fair chance the market will now be relatively subdued in the run-up to the European Union referendum. Whether we are in or out of Europe could affect whether prices go up or down for some time to come.”
peter.walker@ft.com
