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UK House Prices Shows Recovery with 0.5% Increase in April

According to the Nationwide building society, UK house prices experienced a 0.5% rise in April, marking a reversal after seven consecutive months of declines. The average home price reached £260,441, up from £257,122 in March. However, compared to the previous year, prices were still down by 2.7%, following a 3.1% annual decline in March.

Robert Gardner, the chief economist at Nationwide, noted that these figures indicate “tentative signs of a recovery,” although property prices remain 4% below their peak in August.

The Bank of England’s data revealed that mortgage approvals for house purchases in February were almost 40% lower than the previous year and one-third lower than pre-pandemic levels. However, recent industry data on mortgage applications suggest a gradual improvement.

Gardner emphasized the impact of consumer sentiment, stating that confidence has improved in terms of people’s financial positions and economic conditions for the upcoming year.

He mentioned that if inflation decreases as expected in the second half of the year and the job market remains robust, confidence will further increase, supporting a modest recovery in the housing market. However, he cautioned that the recovery is likely to be slow due to the need for household finances to recover, as average earnings have not kept pace with inflation over recent years.

While mortgage interest rates are lower than the peak seen after last year’s mini-budget, they are still more than double the rates from a year ago.

The Bank of England has implemented 11 consecutive interest rate hikes, raising rates to 4.25% to combat inflation exceeding 10%. At the upcoming policy meeting, another quarter-percentage-point increase to 4.5% is anticipated.

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