Rising interest rates and stretched household budgets were surely going to put the brakes on at some point. It's just one month, but Nationwide's figures for April suggest that it may have started.
The average price of a home increased to £267,620 in April, a rise of 0.3%, the ninth consecutive month of price gains. The annual rate fell to 12.1% from 14.3% in March.
Nationwide's figures for April
Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels. Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.
Buyer demand remains strong, with a Nationwide poll finding that 38% of households were either actively moving or considering moving. This figure is surprising given that the typical annual turnover of housing stock is 5%.
However, "The stubbornly hot hot housing market is showing signs of cooling" according to Myron Jobson, a senior personal finance analyst at Interactive Investor.
"Mortgage affordability is a growing concern. The window for cheap mortgages is closing rapidly and the spectre of higher interest rates means that mortgage rates are likely to return to levels we haven’t seen in a while. The property market remains tough for homebuyers and is set to get tougher from an affordability perspective.”
Nationwide also expect the market continuing to slow in the months ahead. They anticipate the squeeze on household incomes and the inevitable rise in interest rates to act as a drag for some time to come.