House prices tick up in April but remain subdued - Nationwide

UK house price growth ticked up a touch in April but remained weak, according to the latest survey released by Nationwide on Wednesday.

Prices were up 0.4% on the month versus a 0.2% increase in March, and 0.9% on the year in April compared to a 0.7% jump the month before.

Nationwide's chief economist, Robert Gardner, said: "Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.

"Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have remained subdued.

“While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months. April marks the fifth month in a row in which annual house price growth has been below 1%."

Capital Economics said that while growth picked up, it is still much slower than the 2% year-over-year growth typically seen in 2018.

"As a result, today’s data still show a housing market that is struggling to gain any upward momentum.

"Looking ahead, with Brexit having been delayed until the start of Q4, housing market conditions are set to stay weak - making a recovery in housing demand unlikely. Furthermore, even if a Brexit deal were to be done this year, house prices would still be very high relative to incomes. As a result, we don’t expect to see much of a recovery in house price growth in 2020 or 2021 either."

Shore Capital analyst Robin Hardy said: "We still believe that prices are likely to run out at +/- zero for the full year with a risk of a small drop. The main concern is lenders who we believe will want to de-risk lending due the loss of inflation and will increasingly look to ‘chip’ the agreed price of a transaction.

"For the housebuilders, even this modest tick up is still not enough to enable them to recover higher build costs and margin pressure remains. Although the annual rate of inflation may edge up again in May, by June the comparatives become tougher and there is a risk that the year-on-year rate fall into the negative. This could trigger its own negative wave as the popular press would likely make a big event out of it.

"We still refer to the last RICS Housing Market Survey in which the estate agents (the primary pricing mechanism in the UK) stated that they expected house prices to fall for another six months."