House prices return to growth in May: Nationwide

House prices in Britain increased by 0.4 per cent from April and compared with May last year it is 1.3 per cent higher

• Shajil Kumar
• 31 May, 2024

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By: Shajil Kumar

HOUSE prices rose in May after falling in the previous two months as the UK property market withstood high borrowing costs, figures from mortgage lender Nationwide showed on Friday.

Prices increased by 0.4 per cent from April, the data showed.

The average house price reached £264,249 this month, compared to £261,962 in April, the mortgage lender said.

Economists polled by Reuters had mostly expected a 0.1 per cent monthly rise.

Compared with May last year, prices were 1.3 per cent higher, a bigger increase than the median forecast in the Reuters poll for a 0.8 per cent gain.

“The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months,” Robert Gardner, chief economist at Nationwide, said.

“Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”

Britain’s housing market slowed in 2023 as the Bank of England (BoE) pushed interest rates to their highest since 2008. But expectations of lower borrowing costs have helped to push down mortgage rates and revive the market in recent months.

BoE will announce its next interest rate decision on June 20. It has kept borrowing costs at 5.25 per cent since last year. The bank has a target to keep inflation at 2 per cent.

A Reuters poll of housing market analysts published on Thursday showed property prices in Britain were expected to edge up by 1.8 per cent in 2024 as faster growth in wages makes homes more affordable.

Nationwide said the approach of Britain’s national election on July 4 was unlikely to affect the market in the coming weeks, noting that in the past broader economic trends appeared to have dominated immediate election-related impacts. (Agencies)