‘Surprising’ new Nationwide Friday update | Personal Finance | Finance

Fresh figures from Nationwide have revealed that annual house price growth climbed to 3% in April, up from 2.2% in March, with prices rising 0.4% on the month. Property and mortgage experts acknowledged the housing market’s resilience in turbulent times, but warned that “we are still at the mercy of external shocks”.

Nationwide Chief Economist, Robert Gardner, said: “Despite the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices, the UK housing market has continued to regain momentum following the slowdown recorded around the turn of the year.

“This is somewhat surprising given that indicators of consumer confidence have weakened noticeably. GfK’s headline index has fallen to its lowest level since late 2023, reflecting households’ more pessimistic views of the economic outlook and their own financial position over the year ahead.

“Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023.

“This softening is likely to have been influenced by higher market interest rates following the onset of the conflict, alongside a more uncertain backdrop. The market is likely being supported by the relative strength of household finances. In aggregate, household debt is at its lowest level relative to income for around two decades and sizeable savings buffers have been built up in recent years, although these have not been evenly distributed across households.

“Moreover, housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in mortgage rates. While market interest rates have risen in recent months, the impact on affordability has so far been limited. Indeed, swap rates, which underpin fixed‐rate mortgage pricing, remain well below the highs reached in 2023 and are broadly in line with levels prevailing in late 2024, implying only a partial reversal of earlier gains.

“Looking ahead, UK economic growth is likely to be somewhat weaker and inflation higher than previously expected as a result of developments in the Middle East, although the ultimate impact will depend critically on the duration of the shock and the policy response.

“However, the UK economy and housing market have proved remarkably resilient in recent years. This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short-lived.”

Andrew Montlake, chief executive of London-based Coreco, said the Nationwide figures highlighted how the property market had a tendency to defy broader economic conditions.

He said: “Yes, it has been a turbulent two months for the UK property market, but, once again, it has shown its resilience and ability to weather even the toughest storms. People continue to want to buy and many, especially first-time buyers, are taking advantage of weak overall sentiment to drive a bargain. They know that they are in the driving seat and are taking advantage of that fact.”

Graham Nicoll, financial planner at NCL Wealth Partners, said: “April’s data from the Nationwide highlights the continued resilience of the UK housing market. Improved affordability over the past year, alongside steady earnings growth, has helped underpin demand.

“However, elevated mortgage rates and wider economic uncertainty are beginning to pose headwinds for activity. Looking ahead, the key issue is whether this resilience can be maintained.

“With borrowing costs remaining high and geopolitical pressures adding to inflationary risks, the outlook points to modest and uneven price growth rather than a pronounced near-term rebound.”

Gaurav Shukla, chief executive of Marlow-based Home Me Mortgages, noted that lenders slashing rates in April gave house prices a boost and likely lifted confidence, but warned that developments in the Middle East mean “we are still at the mercy of external shocks”.

Nathan Emerson, CEO of Propertymark, said: “While the latest Nationwide House Price Index shows house prices continuing to edge upwards, this reflects a market still heavily influenced by constrained supply rather than a sharp surge in demand. Stock levels remain limited across many areas, meaning even modest levels of buyer activity can translate into upward pressure on prices.

“From a market perspective, this signals cautious but improving sentiment, rather than a renewed boom. Affordability remains a key constraint, with higher mortgage rates continuing to cap the pace of growth. As a result, the market appears to be stabilising in a low-growth environment, where structural supply issues are doing much of the heavy lifting on pricing.”