House prices jump as property market ‘treads water in rough conditions’
House prices jumped by 0.7 per cent in April, in signs that the property market is “trading water in rough conditions” as the Iran war spikes mortgage rates.
The average UK house price rose to £270,000 from March to April, marking 3.8 per cent year-on-year growth, according to new government statistics.
But property experts have warned that this year-on-year growth is misleading, because prices took a sharp dip this time last year due to the end of the stamp duty holiday.
Sarah Coles, head of personal finance at AJ Bell, said that most of the sales reflected in Wednesday’s data were agreed before the Iran war “changed the environment significantly”.
Mortgage rates hiked after Iran war
But these buyers and sellers “did a decent job of clinging into agreed sales and resisting price cuts in order to get these completions over the line”, she said.
“Hats off to the property market for its resilience in April. It may not be charging ahead, but it’s treading water in fairly rough conditions,” she added.
Mortgage rates soared soon after the Iran war broke out in late February, but some banks have begun sweetening their deals ahead of tomorrow’s interest rates decision. Nationwide cut its mortgage rates by 0.28 percentage points on Tuesday.
Surveys by the Royal Institute of Chartered Surveyors (RICS) found that buyer numbers and agreed sales fell sharply in March, April and May.
“There’s every chance that things will look less rosy in the months to come,” Coles said, despite the recent peace deal signed between the US and Iran.
Property market ‘flat’
Tom Bill, head of UK residential research at Knight Frank, said: “Ignoring the distortive effect of stamp duty, house prices and trading activity have moderated this spring due to the impact of higher mortgage costs.
“Without the typical seasonal bounce, the result is a market that feels flat rather than one that’s falling off a cliff,” he added.
Earlier this week, property portal Rightmove revealed that house prices fell by 0.6 per cent in June – the biggest drop in that month for 14 years.
Rightmove claimed that this “unusual” slump came because Brits are too busy enjoying the early summer heatwave and the World Cup to go commit to house hunting.
The UK has endured a months-long slump in its housing market since the Iran war broke out, as higher mortgage rates and fragile consumer confidence slows demand.
The property market is holding its breath for the Bank of England’s interest rates decision on Thursday, which is expected to deliver a hold.