Money News
The brakes were applied in the housing market in April with house price inflation slowing sharply to just 0.1% in April, from 1.1% in March. Nationwide Building Society's latest review of the housing market shows annual house price growth falling back below 5% in April to 4.8% (from 5.3% in March). Nationwide puts the average house price now at £163,573.
Commenting on the figures Fionnuala Earley, Nationwide's Group Economist, said, "The price of a typical house in the UK is now almost £7,500 more than at this time last year. This is equivalent to a price increase of just over £20 per day over the last twelve months.
"The cooling in prices in April was not unexpected given the surge in March and shows the wisdom of not placing too much emphasis on one months set of numbers. However, the underlying picture remains reasonably healthy as demand conditions have remained quite firm. While the number of house purchase approvals fell back sharply in February, from 121,000 to 115,000, this remains a buoyant level of activity, well above the ten year average of about 100,000 per month ."
Nationwide expects continued volatility in house prices but does not expect any early move in interest rates that would stimulate or dampen the market. However, Earley points out there are other economic factors that will affect the market, "Oil prices reached record highs in April and this is being swiftly passed on at the petrol pumps... this will clearly hit consumers' pockets and their states of mind. Utility bills are also rising. All in all we think this adds up to a mildly weakening, rather than accelerating, profile for house price growth for the rest of the year.
"Oil and gold have hit the headlines this month with prices of each reaching record highs. These price explosions have brought annual price inflation of these commodities up to over 40%. Silver has also increased dramatically, rising by over 70% in the last year. This makes the recent upturn in annual house price inflation to around 5% in the last two months look decidedly modest."
Nationwide notes that in spite of the very strong recent and historical rallies in commodity prices, including the two OPEC oil price crises in the 1970s, domestic property has still outperformed over the longer term. Since 1970 house prices have increased by over 3,500%, compared to the increase in oil prices of around 1,750%, gold of around 1,550% and silver of about 500%.
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