Mainstream metrics

In the first instance, Nationwide reported that annual house price growth eased back to +3.5% at the end of April, with very little net movement in house prices over the first four months of the year.

This follows a strong spike in housing transactions in March, as buyers rushed to beat the latest stamp duty deadline. Mortgage approvals that month fell marginally however - for the third consecutive month according to the Bank of England, providing a better picture of underlying demand.

Meanwhile, data from TwentyCi shows that agreed sales (net of fall throughs) across the market as a whole were similarly –2.0% below the same month last year, suggesting there remains a core demand for appropriately priced stock – despite the RICS Residential Market Survey telling us new buyer enquiries are thinner on the ground.

Prime application

In the market over £1m, transactional activity in April was more subdued at 8% below the same month last year. This reflects the fact that the top end of the market has been more affected by changes in the tax environment. More recently, it has also felt the impact of tariff announcements from across the pond. We discussed this in much more detail in our Prime UK Residential Report.

Rental performance

Meanwhile, as we await further progress on the Renters Reform Bill, Homelet reports that annual rental growth in April remained at +1.2%.

In the prime markets, we also saw a return of modest rental growth in Q1, as reported by my colleague Jess Tomlinson. Amelia Greene, our Head of Lettings and I also examined the practical implications of changes in tenancy legislation for the top end of the rental market here.

Economic and mortgage considerations

While economic forecasters have been more bearish on the short term outlook for the global and domestic economy, they have also brought forward their expectations for interest rate cuts over the course of this year with The Times reporting that Barclays expect rates to be as low at 3.5% by the end of September this year. 

And with the Bank of England MPC committee voting for a 0.25% cut in the Bank base rates yesterday, we expect to see mortgage affordability ease over the next 12 months.

As importantly, in March the Bank of England announced a change in the way affordability stress tests could be conducted. Santander was first to change its assessments of affordability. They have since been followed by other major high street lenders including Lloyds Banking Group (via Halifax), HSBC and NatWest. Mark Harris at SPF Private Clients looked at this more detail if you would like to read more.

What you read in the papers

This change has the potential to release some pressure on the Bank of Mum and Dad, which we estimate provided £9.6 billion of funding for first-time buyers last year. 

You may also have read in the press that we estimate that those over the age of 60 now hold almost £3 trillion in housing wealth, over 9 times that held by the under 35s, something which sparked interest of the producers of Radio 4’s Money Box at the weekend. You can listen to their report, which includes an interview with yours truly, here.