House prices fell in April by 0.4% as rising mortgage rates made homebuying less affordable.
The latest Nationwide House Price Index showed house price growth had slowed over the last year too, with the value of properties in the UK rising by 0.6% in April, compared with 1.6% in March.
It means house prices are now 4% below the all-time highs recorded in the summer of 2022. Nationwide said a typical property was now £261,962.
Robert Gardner, Nationwide’s chief economist, said: “The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.”
Indeed, research carried out by Censuswide on behalf of Nationwide found 49% of prospective first-time buyers – those looking to buy in the next five years – had delayed their plans over the past year.
The most common reason they gave for them putting plans on hold were house prices and mortgage costs being too high.
Will house prices continue to fall in 2024?
Whilst rising prices create more confidence, falling prices also offer opportunities – especially for first-time buyers.
Anna Clare Harper, CEO of sustainable investment adviser GreenResi, explained: “When prices are rising, this is considered to create and be created by positive sentiment. Ultimately, though, price rises ensure that housing is getting less affordable to first-time buyers.”
However, she doesn’t think there will be dramatical price falls as the year continues.
“It is unlikely that house prices will fall in coming months for several reasons,” she said. “Firstly, housing demand is driven by necessity: we all need a roof over our heads. Secondly, many homeowners have no mortgage or need to sell at a price below valuations in previous years.
“Finally, with an election looming this is ever more relevant: no political party will put in place policies that risk harming house prices, as this is guaranteed to lose votes.
“For this reason, fears of a house price crash are over-blown, whether they come from homeowners or elsewhere in the property market.”
