The Nationwide Building Society has reported that UK house price growth remained subdued in April, with prices only 0.9% higher than the same month last year.
Prices rose 0.4% month-on-month, after taking account of seasonal factors.
The average price of a home was £214,920 in April, the UK’s largest building society said.
Robert Gardner, Nationwide’s chief economist, 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 toprevent 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%.
“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first time buyers entering the housing market in recent quarters.
“Indeed, the number of mortgages being taken out by first time buyers has continued to approach pre-financial crisis levels in recent months.
“First time buyer numbers have been supported by the strength of labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum.
“While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first time buyers, since the cost of servicing the typical mortgage remains in line with or below long-run averages as a share of take home pay in most regions of the UK.
“The exception is in London and parts of the south of England where affordability pressures are more acute, and the monthly cost of servicing a mortgage, as well as raising a deposit, poses a greater challenge.
“Indeed, comparing the incomes of actual first time buyers in 2018 with average incomes in each region highlights how affordability pressures vary across the UK.
“In 2018, first time buyer incomes were in line with or below average incomes in most regions. However, in the East, South East and London, first time buyers’ incomes were significantly higher than average incomes in those regions (60% higher in London), illustrating the extent to which many prospective buyers are priced out of the market in those areas.”
Andrew Montlake, director of Coreco, added: “Sellers may look at these latest house price figures with a sense of dismay but for prospective buyers market conditions have rarely been as good.
“It’s a buyers’ market right now, with a cherry on top.
“First time buyers are driving a significant chunk of the activity in the market at present, especially those given a helping hand by the Bank of Mum and Dad, or Gran and Grandad.
“A combination of lower house prices, Help to Buy, fewer amateur landlords and more mortgage products at 90% and 95% LTV has created the perfect environment for people putting that first foot on the ladder.
“There’s also the small fact that a lot of first time buyers are now looking at the property market and see that it’s often cheaper to buy than rent.
“Affordability issues clearly remain more acute in the capital but even there people are increasingly surprised at the products available given the brutal level of competition in the mortgage market.”
