In April, there was a 0.4% decline in house prices, making them 4% lower than the peak seen in summer 2022, according to the latest figures from Nationwide’s house price index.
Year-over-year, prices still show a slight increase of 0.6% compared to April of the previous year.
Nearly half of the first-time homebuyers (49%) have postponed their plans to purchase a home in the past year, influenced by high property costs (53%) and increased mortgage rates (41%), suggesting they are waiting for prices to drop.
Sarah Coles from Hargreaves Lansdown indicates that rising property prices and costlier mortgages are pushing first-time buyers out of the market, causing frustration for those who hoped interest rates would be cut soon. Unfortunately, anticipated rate cuts might not happen until August or September, though June is still a possibility, with only a few adjustments expected throughout the year, resulting in insignificant changes to mortgage rates.
The current average house price stands at £261,962.
According to Moneyfacts, the average 2-year fixed mortgage rate rose to 5.83% in April, up from 5.56% in January.
North London estate agent Jeremy Leaf isn’t surprised by the minor drop in property prices, pointing out that there are more listings now, giving buyers more options and leading to more substantial negotiations, with only sellers with realistic prices succeeding. He notes that the market is more resilient than it was a few months ago due to increased confidence in affordability amidst controlled inflation and slight increases in mortgage payments.
Tomer Aboody of MT Finance mentions that the dip in house prices stems from buyer affordability issues and uncertainties around interest rates and inflation. For market stability or to aid buyers, measures such as interest rate reductions, more adaptable mortgage products, or changes to stamp duty could be needed. Although house prices have dropped slightly, he emphasizes that they remain only 4% lower than their 2022 peak, which means for many, they are still out of reach. He advocates for more property listings and incentives for potential sellers to help regulate the prices.
