UK house prices fell in April for the second consecutive month, according to figures from the latest Nationwide House Price Index.
April saw house price growth drop by 0.4% with the average price of a home in the UK costing £207,699, up slightly on March’s figure of £207,308.
The annual house price growth fell by 2.6% – the weakest growth since June 2013.
Robert Gardner, Nationwide’s chief economist, said the news of slowdown in growth came as a surprise. He commented: “In some respects, the softening in house price growth is surprising because the unemployment rate is near to a 40- year low, confidence is still relatively high and mortgage rates have fallen to new all-time lows in recent months.”
He suggested that the decrease might be a result of “emerging squeeze on real incomes” due to the weaker sterling rate.
Mr Gardner said the advancing gap between house prices and earnings was also key factor in the slowdown: “The typical house price is currently 6.1 times average earnings, well above the long run average of 4.3 times earnings, and close to the all-time high of 6.4 times recorded in 2007.”
Nationwide said that on-going uncertainties surrounding Brexit meant it was difficult to conclude whether the softening was a blip, a result of a squeeze on people’s incomes or affordability issues.
The report follows Hometrack’s recent index showing that house prices in Oxford, London and Cambridge have all slowed to less than 5% “for the first time in five years as affordability pressures, and tax changes for investors, constrain demand”.
Read the full report here.
Despite these issues, Nationwide expects house price growth to remain at around 2% for the rest of 2017.