Key facts
- UK house prices rose 0.7% in April, reaching an average of £270,000.
- Year-on-year growth stood at 3.8%.
- Experts attribute the April price jump to deals agreed before the Iran war impacted mortgage rates.
- Mortgage rates increased significantly following the Iran war in late February.
- Buyer numbers and agreed sales have seen sharp declines in recent months.
UK house prices saw a 0.7% increase in April, bringing the average price to £270,000 and marking a 3.8% rise year-on-year. However, experts suggest this growth is misleading, as the sales reflected in the data were largely agreed upon before the Iran war caused a significant spike in mortgage rates.
Sarah Coles, head of personal finance at AJ Bell, noted the resilience of the property market in April, describing it as 'treading water in fairly rough conditions.' She indicated that buyers and sellers worked to secure completions on sales agreed prior to the Iran war's impact on the market environment.
Mortgage rates surged following the Iran war's outbreak in late February. Despite this, some financial institutions have begun to offer more attractive deals, with Nationwide recently reducing its mortgage rates by 0.28 percentage points. Surveys from the Royal Institute of Chartered Surveyors (RICS) have indicated a sharp fall in buyer numbers and agreed sales throughout March, April, and May.
Tom Bill, head of UK residential research at Knight Frank, commented that house prices and trading activity have moderated due to higher mortgage costs, noting the absence of a typical seasonal bounce. He characterized the market as 'flat rather than one that’s falling off a cliff.'
Earlier in the week, property portal Rightmove reported a 0.6% decrease in house prices for June, the largest drop for that month in 14 years. Rightmove attributed this 'unusual' slump to consumers being preoccupied with the summer heatwave and the World Cup.