Annual UK house price growth slowed in April but activity remained above pre-Covid levels, latest data from Nationwide shows.
The Swindon-headquartered building society said growth slowed to 12.1% in the month - down from 14.3% in March - but prices were up 0.3% month-on-month after taking account of seasonal effects.
It is the eleventh time in the past year that annual growth rates have been in double digits.
“Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels," said Robert Gardner, Nationwide's chief economist.
"Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices."
Nationwide said it was "surprising" conditions remained so buoyant, given mounting pressure on household budgets.
"Housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased (though they remain low by historic standards)," said Mr Gardner.
Why is activity so buoyant?
In a Nationwide survey of more than 3,000 people across the UK, some 38% said they were either in the process of moving or considering a move.
The proportion was particularly high in London, where almost half said they were moving or considering doing so. But even in Wales, where the share was lowest, more than 25% were either moving or considering a move - very high, given that only around 5% of the housing stock turns over in a typical year in the UK.
The proportion of people considering a move was highest among private renters (45%) but was also elevated among those living with family (44%) and those owning their own home (30% of those owning their property outright and 42% of those owning with a mortgage).
Despite mounting pressure on household finances, the share of people moving or considering a move was higher than during the height of the pandemic in April last year, Nationwide said.
Are households still racing for space?
The survey results suggest that shifts in housing preferences as a result of the pandemic are continuing to support housing market activity, though to less of an extent than at this time last year.
Around a quarter (24%) of those moving or considering a move said this was to relocate to a larger property - and for most age cohorts the majority are still looking to move to less urban environments.
However, the proportion of people citing a desire to get away from urban centres and have more outside space has declined substantially – to 12% and 15%, down from 25% and 28% in April 2021 - Nationwide said. For most movers and potential movers, the majority of those surveyed are looking to trade up – the exception being amongst those aged 55 and above, where nearly 40% are looking to move to a smaller property compared to just 7% looking to move to a larger one.
Where next for the housing market?
“We continue to expect the housing market to slow in the quarters ahead," Mr Gardner added.
"The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.
"Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”
