Annual house price growth eased to 3.4% in April, according to Nationwide’s latest House Price Index, down from 3.9% in March.
Prices were down 0.6% month-on-month, bringing the average price of a UK property to £270,752, down from £271,316 in March. However, the building society expects activity to increase again over the summer months.
Robert Gardner, Nationwide's Chief Economist, said: “The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month. Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations.
“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.”
Markets are expecting a quarter point cut in the base rate when the Bank of England’s Monetary Policy Committee meets in May which should help buyers concerned about affordability. Swap rates, which determine fixed rate mortgage pricing, have already fallen, resulting in the return of sub-4% mortgage rates, and there are several other positive indicators that should boost activity in coming months.
Mr Gardner said: “Unemployment remains low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect.”
