The latest figures from Nationwide show that the pace of house price growth has picked up for April – but that the overall trend may be towards a gradual cooling of house prices.

Figures for April show that house prices are up 0.9% from the March figure of 0.5%. Annual house price inflation now stands at 10.2%, pushing the average house price in the UK to £180,314.
 
Commenting on the figures Fionnuala Earley, Nationwide’s Chief Economist, said: “While the monthly rise in prices is stronger than the [Bank of England] would have liked to see, it can take some comfort from the fact that the underlying trend is softening”

The latest increase in house prices, coupled with an above-target inflation figure, means that many the Monetary Policy Committee meeting in May as a formality, with an increase in interest rates to 5.5%

Many analysts have suggested a further increase, to 6%, is necessary to tackle inflation. However, Nationwide warns against this "Too sharp a rate hike could undermine market confidence and dry demand up swiftly," Ms Earley warned.

She explained that previous price increases had been supported by resilient demand, but signs are emerging that this is beginning to wane ‘across the board’.

However, talks of a crash in the property market are in premature, said  Nationwide. Due to the slow response often witnessed in the UK housing market, rates would need to increase by a further 2% before there was a risk of stretched affordability, as seen during the 1980’s.

The fact that growth in the economy remains strong offers more support for the current situation in the housing market, and make an outright crash less likely.

Source: Nationwide