Falling inflation and rising wages appear to have given a small Spring boost to the “resilient” housing market, according to latest figures from lender Nationwide.
The lender said the average price of a home in the UK rose 0.4% in May to £264,249, following a 0.4% dip in April. That accelerated the annual rate of increase from 0.6% to 1.3%.
Nationwide’s chief economist Robert Gardner, said: “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months supported by solid wage gains and lower inflation.”
Wages have been rising above inflation for the past 10 months giving buyers more fire power when they come to take out mortgages.
Gardner also said he believed the election on July 4 would have little impact on house prices if an analysis of trends seen during and after previous campaigns are anything to go by.
He said: “On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts.
“It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most homebuyers, elections are not foremost in their minds while buying or selling property.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Despite not including the increasingly high proportion of cash sales, this historically reliable house price indicator confirms what we are seeing in our offices – buyers and sellers are shrugging off possible uncertainty arising from the forthcoming election and concentrating more on probable near-term falls in inflation and interest rates.
“The increase in property choice is not having a significant impact on values or stopping some hard negotiations on both sides. Appropriately-priced property is still generating considerable interest and offers.”
But Ranald Mitchel, director at advisers Charwin Private Clients, said: “We’re not sure buyers are as resilient to affordability as the Nationwide suggests. There has been a surge in property listings, accompanied by an increase in viewings.
“However, many of these viewings are not yet translating into sales. The market is in danger of oversupply, shifting the balance in favour of buyers as it will present them with more options. Despite this advantage, buyers continue to face the challenge of high mortgage borrowing costs, which remains a significant consideration for many when deciding to move. The property market is on a knife edge.”
