UK house price growth unexpectedly eases in April - Halifax

UK house price growth unexpectedly eased in April, according to data from lender Halifax.

House prices in the three months to April were up 2.2%, down from the 2.7% growth seen in March and below expectations for a 3.3% increase.

On a monthly basis, prices were down 3.1% following a 1.6% rise in March, missing expectations for a much smaller drop of 0.2%.

On a quarterly basis, meanwhile, prices were 0.1% lower than in the preceding three months, marking the third consecutive declined for this measure.

Halifax managing director Russell Galley said: "Both the quarterly and annual rates have fallen since reaching a recent peak last autumn, with these measures providing a more stable indication of the underlying trend than the monthly change.

"Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales edging down. Housing supply - as measured by the stock of homes for sale and new instructions - is also still very low. However, the UK labour market is performing strongly with unemployment continuing to fall and wage growth finally picking up. These factors should help to ease pressure on household finances and as a result we expect annual price growth will remain in our forecast range 0-3% this year."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The Halifax index is by far the most volatile measure of house prices, even though it is supposed to be seasonally adjusted, so it would be a mistake to sound the alarm over April’s huge fall in prices. The sharp fall - the biggest since September 2010 and the second largest since the index began in 1983 - followed a large 1.5% month-to-month rise in prices in March.

"On a three-month on three-month basis, prices were down just 0.1%, similar to the 0.2% growth recorded by Nationwide’s index in April. Looking ahead, consumers’ low confidence and modest rises in mortgage rates suggest that demand will continue to weaken. Prices will fall rapidly, though, only when a large proportion of homeowners are forced to sell up. With unemployment and borrowing costs low and credit freely available, few people are being forced to sell their homes quickly. A period of broadly flat house prices, therefore, remains the most likely outcome."

Howard Archer, chief economic advisor to the EY Item Club, said: "The housing market is clearly currently struggling to gain traction and we suspect that any meaningful upturn will remain elusive over the coming months. We expect house price gains over 2018 will be limited to a modest 2%. At this stage, we expect prices to rise by 3% in 2019.

"The fundamentals for house buyers are likely to remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing. Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.

"House buyers will also likely be concerned about further interest rate hikes over the coming months. While a rate hike in May now seems improbable, we suspect the Bank of England is still more likely than not to increase interest rates later this year and Bank of England Governor Mark Carney still indicated that the UK should prepare for a few interest rate rises over the next few years."