Nationwide Chief Economist Says UK Housing Activity ‘Relatively Subdued’

UK housebuilder stocks were mixed at the start of Tuesday's session, while estate agent Foxtons dipped after the latest data from Nationwide's House Price Index revealed a marginal increase in the annual rate of house price growth in the UK.

LON:FOXT shares were trading sharply down on the open, touching 52.39 in the early minutes before staging somewhat of a rally as we get through the first quarter of the day back at 54.20, still 0.91% down on the day. Other London listed shares in the sector are also in the red through the day so far, as the FTSE 100, and 250 are both green.

The March 2024 report indicates a 1.6% rise in house prices year over year, up from 1.2% in February.

Northern Ireland was the best-performing region, with a significant 4.6% increase in house prices. The South West recorded the weakest performance, experiencing a 1.7% decline in prices over the year.

Nationwide's Chief Economist, Robert Gardner, commented on the figures, attributing the slight dip in house prices month-on-month in March (-0.2%) to seasonal effects. 

He also noted that while there has been an increase in activity compared to the end of 2023, it remains relatively subdued in historical terms. 

“For example, the number of mortgages approved for house purchase in January was around 15% below pre-pandemic levels,” said Gardner. “This largely reflects the impact of higher interest rates on affordability. While mortgage rates are below the peaks seen in mid-2023, they remain well above the lows prevailing in the wake of the pandemic.”

Nevertheless, looking ahead, Gardner expressed optimism regarding improving consumer sentiment and affordability due to easing cost-of-living pressures. He cited a rise in new buyer inquiries and instructions to sell in recent months. 

If these trends persist, Nationwide believes housing activity is likely to gain momentum, although the pace of recovery will depend heavily on the trajectory of interest rates.

Overall, in the first quarter, the average UK house price stood at £260,791, up 1% from last year.