House prices have picked up in May, rising 0.4% over the month despite the pressures being created by rising mortgage rates.
The latest Nationwide House Price Index showed, over the year to May, UK house prices rose by 1.3% – this compared to a 0.6% annual rise in April.
Indeed, the monthly increase of 0.4% is in contrast to the 0.4% fall in prices in April. It means the average UK property is now £264,249, according to Nationwide.
Robert Gardner, chief economist at Nationwide, said: “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months.
“Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”
What effect will the election have on house prices?
Analysis by Nationwide of past general elections and the EU referendum show these events have not historically generated volatility in house prices or resulted in a significant change in house price trends.
Gardner added: “On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts.”
He added: “It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most homebuyers, elections are not foremost in their minds while buying or selling property.”
Spring property market ‘bounce’
Whilst the slight rise in house prices demonstrates the property market is remaining resilient through the high interest rate environment, Spring is traditionally the busiest season for the property market.
As such, Karen Noye, mortgage expert at Quilter said the May house price rise was likely in part due to the annual spring bounce as more buyers came to market making it more competitive.
“The slight uptick,” she added, “suggests some stability, albeit under challenging conditions.
“Nationwide’s data reflects a modestly positive trend, but the housing market remains very unpredictable and the growth in house prices is modest.
“Monthly property transactions have been lower than expected, indicating a cautious market but this is no surprise given the stress the nation’s finances have been under.
She added: “Attention now turns to the Bank of England’s upcoming monetary policy decision and what it intonates as a plan for the rest of the year. While no immediate changes in interest rates are expected, a future cut could provide a much-needed boost to the housing market.
“Lower borrowing costs would likely stimulate demand, as many prospective buyers are currently waiting for more favourable conditions.”
