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The Nationwide Building Society has published its latest review of the housing market which suggests that UK house price growth has remained subdued in April, with prices just 0.9% higher than the same month last year. 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.

The Lender suggested that measures of consumer confidence had weakened around the turn of the year with surveyors reporting 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%. 

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 supported by the strength of labour market conditions, with both 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.

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