Rising interest rates see house prices fall in April

UK house prices fell by 0.4% in April compared to the previous month as rising long-term interest rates put off first-time buyers. 

According to the latest figures from Nationwide, the fall resulted in a slowing of the annual rate of house price growth to 0.6%, from 1.6% the previous month. 

Robert Gardner, chief economist at the building society, said the slowdown reflected “ongoing affordability pressures”, with longer term interest rates rising in recent months, reversing the steep decline seen around the turn of the year. 

Research recently carried out by Censuswide on behalf of Nationwide found nearly half (4.9%) of prospective first-time buyers have delayed their plans to buy over the past year. 

High prices were cited by 53%, while 41% said that higher mortgage costs were preventing them from buying.  

“Coupled with this, 84% of prospective first-time buyers said that the cost of living has affected their plans to buy, for example through having less money each month to save for a deposit. 

Among recent first-time buyers, 38% said they ended up compromising on the property they purchased, and 40% of this group bought a property to do up rather than a ‘turn key’ ready property.  

The average price of a house in the UK stood at £261,962 in April. 

>> Read more: House prices ‘largely unchanged’ compared to last year, Zoopla figures indicate

James Briggs, head of intermediary sales at mortgage lender Together, said the drop “formed more of a grey cloud over the typically busier spring period”. 

“With mounting concerns the Bank of England will not be in a position to lower interest rates until August, this may cause some buyers to pause on their property plans in the short-term,” he said. 

Sam Mitchell, chief executive of real estate company Purplebricks, said there was “still positive sentiment” from buyers and that while banks had increased rates, there had also been “an increase in new market offerings”.