UK house prices climb 3.5% in April as regional disparities widen

Average UK house prices continued their upward trend in April, climbing 3.5% to £265,000, according to the latest data from the Land Registry’s UK House Price Index.

This figure, although lower than the 7.0% annual increase seen in March, underscores ongoing resilience in the housing market despite April’s stamp duty changes and wider financial headwinds.

Regional variation in price growth was notable, with the North East leading among English regions at 6.4% annual inflation, while the South West saw the weakest price growth at 0.9%.

Analysts say the market’s current direction hinges on the Bank of England’s next interest rate move.

Regional data shows diverging trends

England saw a 3.0% year-on-year price rise in April, while prices in Wales and Scotland grew more sharply, up 5.3% and 5.8% respectively. Within England, the North East posted the strongest annual inflation, though it had cooled from 15.3% in March.

London saw a slight reacceleration, with annual inflation at 3.3%, higher than March’s rate. The South West registered the smallest growth among English regions, with price inflation dropping from 5.9% in March to just 0.9% in April.

Industry watchers suggest that these mixed patterns reflect localised market dynamics, with some areas continuing to benefit from lifestyle-driven relocation trends and higher levels of new listings, while others contend with affordability constraints and declining demand.

Stamp duty changes, mortgage costs weigh on activity

Despite April’s price increase, experts note that the market is still adjusting to the removal of stamp duty relief introduced during the pandemic.

The end of this benefit was expected to cool demand, yet price growth suggests buyer appetite has remained intact.

Accumulated household savings and buyer interest are helping to offset the impact of policy changes.

However, market stability in the coming months will depend on how quickly interest rates are reduced, along with broader economic indicators such as inflation and wage growth.

Swap rates have also risen in recent weeks, adding pressure on mortgage lenders to recalibrate their fixed-rate offerings.

Some lenders have absorbed the cost to maintain competitive products, while others have adjusted pricing in response to market volatility and geopolitical uncertainty.

Buyer confidence holds but caution grows

April’s price growth was partly driven by increased buyer activity in March, ahead of the stamp duty adjustment. Rising inflation could delay the anticipated fall in mortgage rates, potentially slowing the market’s momentum.

Buyers are becoming more cautious amid cost-of-living concerns and tighter budgets.

However, certain regional hotspots such as Bury St Edmunds, Cornwall, Exeter, Newmarket, and Sevenoaks saw robust demand in May, both in terms of property completions and new listings. Seller confidence remains strong, with a notable increase in listings compared to two years ago.

While the Government’s Spending Review has placed housing high on the agenda, the timeframe for policy measures to translate into actual supply expansion remains uncertain.

Until structural issues in housing supply are addressed, upward pressure on prices is likely to persist.

First-time buyers return despite inflation concerns

Seasonal trends also contributed to April’s price gains, as the spring and summer periods are traditionally active for the housing market. Buyer demand in core price ranges remains healthy.

There has been a resurgence in first-time buyer activity, even in the absence of a stamp duty holiday. Many are turning to family assistance and are being pushed to buy due to ongoing rental market challenges.

Landlord exits have reduced available rental stock, pushing up demand and rents, which in turn is nudging some renters towards home ownership.

While expectations for an interest rate cut in the near term have diminished due to persistent inflation, further monetary easing later in the year could help sustain price growth and unlock additional buyer interest.

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