Financial News: UK House Prices Log Unexpected Increase In April-

UK House Prices Log Unexpected Increase In April- Nationwide

05/02/2023 - 08:57:00 (RTTNews)

(RTTNews) - UK house prices rose unexpectedly in April after posting seven consecutive declines suggesting that the housing market is stabilizing after the mini-budget shattered financial markets last year.

House prices posted an annual fall of 2.7 percent, which was slower than the 3.1 percent decrease in March, the Nationwide Building Society said Tuesday.

After falling for seven consecutive months, house prices gained 0.5 percent. Prices were expected to fall 0.4 percent after declining 0.7 percent in March.

The seventh consecutive monthly decrease has left house prices 4 percent below their August 2022 peak.

House prices have decreased since former chancellor Kwasi Kwarteng unveiled a huge tax cut for the rich last August. His measures drove mortgage rates to a near 14-year high.

Nationwide Chief Economist Robert Gardner said the Bank of England data suggested that the housing market activity remained subdued at the start of the year with the number of mortgages approved nearly 40 percent below the previous year in February.

Nonetheless, recent data on mortgage applicants pointed to signs of a pickup.

Gardner observed that consumer confidence remained subdued by historic standards. But households' view of their own financial position over the coming year and general economic conditions in the year ahead improved markedly in recent months.

If inflation falls sharply as estimated over the second half of the year, this would lift sentiment, especially if labor market conditions remain strong, Gardner noted.

Such a situation would help a moderate recovery in housing market activity. However, any upturn will likely remain fairly pedestrian as household finances will take time to recover. Mortgage interest rates will also act as a headwind.

In the current tightening cycle that began in December 2021, the <a href=https://www.rttnews.com/3352153/bank-of-england-raises-key-rate-further-to-tame-inflation.aspx target=_blank >Bank of England </a>has raised its key interest rate by 415 basis points. The benchmark rate has hit the highest since early 2008.

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