‘Subdued’ house price growth as property values just 0.9% higher than a year ago

House prices have now been increasing by less than 1% annually for five months in a row, according to an index.

Across the UK, house prices rose by just 0.9% annually in April, reaching £214,920 on average, Nationwide Building Society said.

Annual house price growth has been running at less than 1% since December 2018.

House prices increased by 0.4% month on month in April.

Robert Gardner, Nationwide’s chief economist, said: “April marks the fifth month in a row in which annual house price growth has been below 1%.”

He said: “UK house price growth remained subdued in April, with prices just 0.9% higher than the same month last year.

“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.

“Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer inquiries have remained subdued.

“While the number of properties coming on to the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months.”

Mr Gardner said there have been “steady gains” in the number of first-time buyers entering the housing market.

“First-time buyer numbers have been supported by the strength of labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum,” he said.

“While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability.

“Indeed, raising a deposit appears to be the major barrier for prospective first-time buyers, since the cost of servicing the typical mortgage remains in line with or below long-run averages as a share of take-home pay in most regions of the UK.”

Howard Archer, chief economic adviser at EY Item Club said: “Consumers may well be particularly cautious about committing to buying a house, especially as house prices are still expensive relative to incomes.

“Also, it looks questionable whether the labour market and earnings growth will sustain their recent strength as companies tailor their behaviour to a relatively lacklustre domestic economy, prolonged Brexit uncertainties and a challenging global environment.

“Consequently, we suspect house prices will rise only 1% over the year and would not be at all surprised if they stagnate.”

Gareth Lewis, commercial director of property lender MT Finance, said: “First-time buyer numbers continue to improve, which is hugely positive.

“The market needs first-time buyers so that second-steppers can move up the ladder to bigger homes.”