Nationwide, the UK’s largest building society, has released new figures showing a slight increase in house prices, indicating resilience in the housing market. According to the report, house prices rose by 0.4% in May compared to April, with the average cost of a home now standing at £264,249. Year-on-year prices have also seen a 1.3% increase.
This rebound in prices follows declines of -0.4% in April and -0.2% in March, as reported on Nationwide’s index. Other lenders have also noted modest falls in recent months. Chief economist at Nationwide, Robert Gardner, attributes this resilience to improved consumer confidence, driven by solid wage gains and lower inflation.
The upcoming general election is not expected to have a significant impact on the housing market in the short term, as previous national polls have not resulted in volatility or significant changes in house price trends. However, concerns over subdued demand due to higher mortgage rates persist.
Inflation, which dropped to 2.3% in April, the lowest level in almost three years, has also been a factor in the housing market. While this rate was higher than expected, analysts suggest it may make a potential cut in interest rates by the Bank of England in June or August less likely.
Nathan Emerson, chief executive of estate agent body Propertymark, acknowledges the potential for a slowdown in the housing market over the summer following the general election. However, with inflation on a downward trend and the possibility of interest rate cuts, he predicts a welcome influx of competitive deals from lenders in the marketplace.
Andrew Wishart, a senior economist at Capital Economics, notes that house prices have remained flat for the past year and a half, with the slight increase in May bringing them in line with levels from January 2023. He predicts that house prices will remain stagnant in the near term, as recent delayed expectations of Bank Rate cuts will continue to put upward pressure on mortgage rates. However, he expects a 2% increase in house prices this year and 5% in 2025 following anticipated interest rate cuts.
