UK house prices fell slightly in April as borrowing costs weighed heavily on potential buyers.
The latest monthly report from Nationwide showed that prices were down 0.4% compared with March, taking the annual rate of growth to 0.6% from 1.6%.
Across the UK, the average cost of a home stood at £261,962 — around 4% below the peak seen in summer 2022.
“The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year,” said Robert Gardner, Nationwide’s chief economist.
Rates on fixed rate mortgage deals have crept up due to changing expectations over when the Bank of England will cut interest rates.
Data from financial information service Moneyfacts reveals that the average two-year fixed residential mortgage rate is moving back towards the 6% mark and the average five-year rate is close to 5.5%.
Research carried out by Censuswide on behalf of Nationwide found that nearly half (49%) of prospective first-time buyers have delayed their plans over the past year.
“Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it is also notable that 41% said that higher mortgage costs were preventing them from buying,” Gardner said.
“Coupled with this, 84% of prospective first-time buyers said that the cost of living has affected their plans to buy, for example through having less money each month to save for a deposit.”
Amongst people who recently bought their first home, 38% said they ended up compromising on the property they purchased. Of these, nearly 40% bought a property in need of renovation while 34% bought in a different area.
