UK house price growth slows as cost of living crisis starts to hit market

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House prices continued to climb in April but the rate of growth is slowing as soaring inflation and the cost of living crisis starts to affect the market, figures show.

The average amount paid for a home in the UK climbed 0.3% to £267,620 in April on a month earlier, Nationwide found, the ninth consecutive month of growth.

However, the rate of house price growth slowed from a 1.1% rise in March and is the smallest increase since September last year, according to the monthly property index from the building society.

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On an annual basis house prices are up 12.1% year on year, a modest slowdown compared with 14.3% in March.

The boom has been fuelled by a shortage of housing stock and a pandemic-fuelled hunt by city dwellers for larger houses, gardens and more rural living.

However, Nationwide believes the market will slow as household budgets are squeezed and mortgages become more expensive.

“It is surprising that conditions have remained so buoyant, given mounting pressure on household budgets, which has severely dented consumer confidence,” said Robert Gardner, the chief economist at Nationwide.

“We continue to expect the housing market to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.

“Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

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The average price of a UK home has risen by almost £50,000 since the start of the coronavirus pandemic in March 2020, according to Nationwide.

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It said that given the shift in conditions, it was striking that a survey found 38% of respondents stated they were either in the process of moving or considering a move. The proportion was particularly high in London, where almost half said they were moving or considering a move.

“The stubbornly hot housing market is showing signs of cooling,” said Myron Jobson, a senior personal finance analyst at Interactive Investor.

“Mortgage affordability is a growing concern. The window for cheap mortgages is closing rapidly and the spectre of higher interest rates means that mortgage rates are likely to return to levels we haven’t seen in a while. The property market remains tough for homebuyers and is set to get tougher from an affordability perspective.”


Nationwide said that despite mounting pressure on household finances, the share of people moving or considering a move was higher than during the height of the pandemic in April last year.

“The survey results suggest that shifts in housing preferences as a result of the pandemic are continuing to support housing market activity, though to less of an extent than at this time last year,” said Gardner.

About a quarter (24%) of those moving or considering a move said that this was to move to a larger property, about the same proportion as last April. However, the proportion of those citing a desire to get away from the hustle and bustle of urban life or to get access to a garden or more outside space has declined to 12% and 15% respectively, down from 25% and 28% last April.

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“Let’s be honest, growth slowing from 14 to 12% is still an insane rate of growth,” said Rhys Schofield, managing director at Peak Mortgages and Protection. “What we may see is some of the lunacy around house price rises ease off.”

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In March, Nationwide said that UK house prices were growing at their fastest rate since 2004, when the UK experienced a housing boom that preceded the financial crisis.

In October, The Office for Budget Responsibility (OBR), an independent body that makes economic forecasts for the government, revised an estimate that house prices would fall this year.

Its revised forecast is that the rate UK house price growth will slow to 3.2% this year and decelerating further to 0.9% in 2023.

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