UK annual house price growth picked up to 3% in April, from 2.2% in March, the latest Nationwide house price index shows.
Prices increased by 0.4% month-on-month, after taking account of seasonal effects.
Robert Gardner, Nationwide's chief economist, said: “Despite the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices, the UK housing market has continued to regain momentum following the slowdown recorded around the turn of the year.
“This is somewhat surprising given that indicators of consumer confidence have weakened noticeably. Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023. This softening is likely to have been influenced by higher market interest rates following the onset of the conflict, alongside a more uncertain backdrop.
“The market is likely being supported by the relative strength of household finances. In aggregate, household debt is at its lowest level relative to income for around two decades, and sizeable savings buffers have been built up in recent years, although these have not been evenly distributed across households.
“Moreover, housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in mortgage rates.
“While market interest rates have risen in recent months, the impact on affordability has so far been limited. Indeed, swap rates, which underpin fixed rate mortgage pricing, remain well below the highs reached in 2023 and are broadly in line with levels prevailing in late 2024, implying only a partial reversal of earlier gains.
“Looking ahead, UK economic growth is likely to be somewhat weaker and inflation higher than previously expected as a result of developments in the Middle East, although the ultimate impact will depend critically on the duration of the shock and the policy response.
“However, the UK economy and housing market have proved remarkably resilient in recent years. This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “It’s a stretch to say it’s business as usual, but Nationwide’s data does confirm business is still being done and this is not a market in freefall.
“However one swallow does not a summer make and national averages can be misleading. What we’re seeing on the ground is a series of highly polarised regional markets, with different parts of the country performing quite differently by location, property type and price sector.
“Supply is at an all-time high after the Easter weekend saw the traditional surge in new listings. Nevertheless the number of sales being agreed is more frugal than free-flowing.
“This is due to two factors - buyer caution and buyers’ knowledge that they have time and choice on their side.
“In many areas the number of homes for sale far exceeds the number of serious buyers, and this is allowing buyers to call the shots on both tempo and price. As a result buyers are often demanding - and getting - significant price reductions; while those who are not convinced that a home is 100% right for them won’t hesitate to walk away.
“Mortgage interest rates have eased in recent weeks, but the market still lacks the two elements needed for a full return to normality: clarity and confidence.
“The market is still unsettled and many of the deals that are being done are by buyers who need to move rather than just want to move, and by those who calculate that lower purchase prices more than offset higher borrowing costs.
“The volatile global backdrop is unsettling, and all buyers are cautious and highly price sensitive. Nevertheless the market fundamentals remain sound and increasing numbers of buyers are realising for the well informed, the current volatility can create market opportunities.”
Karen Noye, mortgage expert at Quilter, added: "Resilience will be tested by what happens next geopolitically, particularly if swap rates begin to climb again.
"The Bank of England’s decision to hold rates at 3.75% yesterday offers stability, but not certainty. Governor Andrew Bailey has warned he cannot give a ‘cast iron assurance’ against further rate rises, underlining how the Iran war and its impact on energy prices is keeping inflation risks in play. For now, today’s data suggests that uncertainty has yet to dent house prices in a meaningful way.
"Part of that resilience reflects improving conditions in the mortgage market. Lenders have started trimming fixed rate deals again as swap rates ease and competition for borrowers intensifies. That has created a slightly more supportive backdrop, although pricing remains highly sensitive to shifts in market expectations.
"The result is a housing market that is moving, but cautiously. Demand remains, but buyers are more price-sensitive and quicker to react to changes in mortgage costs, keeping a lid on stronger price growth."
