Industry reactions: 

Tom Bill, head of UK residential research at Knight Frank commented, “The house price growth seen in the first two months of this year is going into reverse as higher mortgage rates take their toll on demand. Borrowing costs have risen as a strong labour market means the prospect of a rate cut has become more remote. There are added financial pressures in the system as a wave of owners roll off sub-2% mortgages agreed in early 2022. We believe demand and house price growth will pick up later this year as a rate cut moves onto the horizon.”

Nicky Stevenson, managing director at Fine & Country, said: “The property market remains highly changeable, with prices up slightly one month then falling back the next.

“Although demand continues to pick-up nicely with mortgage approvals rising, the economy remains in a fragile position.

“Uncertainty over the Bank of England’s base rate decision has led to some major lenders increasing mortgage rates, and this may have a short-term effect on consumer confidence.

“However, the property market has proved to be incredibly resilient in recent years, and buyers and sellers alike have proved highly adaptable to the higher interest rate environment.

“Sellers are much more open to negotiation, and there is a steady pipeline of homes coming onto the market, however both factors may be playing a part in causing house prices to fall slightly.

“A base rate drop would help to solidify confidence in the housing market and the economy, and hopefully such an announcement will be forthcoming soon.”

Sam Mitchell, CEO of Purplebricks, commented: “There is still positive sentiment from buyers and we are seeing viewing activity increase, signalling stability in the housing market. While several banks have slightly increased mortgage rates, there has also been an increase in new market offerings, both have sparked buyers into action which has resulted in more sales. The Bank of England has just announced mortgage rate approvals are at an all time high and people will want to capitalise on this.

“It’s harder for buyers in the South of England as relatively high rents and stamp duty costs and inflation make it extremely difficult for first time buyers save for a deposit to get on the property ladder. However, this trend, coupled with the continued preference for home working, has led to some strong activity in more affordable rural areas with good transport links to cities.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “Another modest fall in house prices indicates that growth we saw at the start of this year was unsustainable.

“Elevated living costs are still putting pressure on households to control their spending, while also making it more difficult for first-time buyers to save for a deposit.

“Sellers should not be surprised if buyers are looking for more flexibility on price. If you are in a rush to sell, you may encounter offers that are well below your asking price.

“It’s always worth seeking advice from your local estate agent to see what help they can offer. Do your research and look at the price paid for properties in your vicinity over the past year and value it wisely.

“While house price growth may be easing, that does not mean that the demand for quality housing is falling. On the ground we are seeing more potential buyers coming through the doors with the hopes of escaping the costly rental market.

“More attractive mortgage products will help to get keys in hands for first-time buyers but we really need to see a renewed determination to offer more incentives to buy, as well as a push to build more new homes.

“The coming months will rely on affordability concerns easing off, but as the summer tends to be a busy period for the property industry, we may see prices grow as market activity surges.”

Nathan Emerson, CEO of Propertymark, commented: “Buyers and sellers are starting to accept the new reality of the housing market in the face of current interest rate levels, and it is encouraging to see that house prices are increasing year on year, giving sellers the confidence they need to put their house onto the market during what will be a busy time for the housing market.

Propertymark’s latest Housing Insight Report showed there was an 18 per cent increase in new properties coming to the market. Also, the number of mortgage approvals made to home buyers increased from 56,100 in January to 60,400 in February, according to recent Bank of England figures. Hopefully the UK Government takes the initiative and encourages growth in the housing market by meeting its own housing targets.”

Matt Thompson, head of sales at Chestertons, stated: “The uplift in market activity typically associated with spring was slightly delayed this year but became more evident over the course of April. Compared to March, we saw an increase in the number of London house hunters which also led to sellers feeling more confident about putting their property up for sale. Still, demand continued to outweigh supply in April which gave the majority of sellers the upper hand during price negotiations.”

Anthony Codling, head of European housing and building materials research at RBC Capital Markets, said: “House prices fell for the second month in a row in April as higher mortgage rates began to bite, the increases in mortgage rates are small, but enough to scupper the plans of the marginal homebuyer. However, we don’t expect to see significant house price falls this year, the volume of housing transactions is likely to fall to a greater degree than house prices as it is those that can buy rather than those that can’t who decide house prices and mortgage approvals and housing transactions are pointing up not down.”

Jonathan Hopper, CEO of Garrington Property Finders, commented: “In the space of barely a couple of months, house prices have moved from recovery to reverse.

“The New Year jump in prices now seems a very long time ago, after Nationwide’s data showed average prices fell in both March and April.

“Two things lie behind the market’s about turn on prices. The first is mortgage interest rates are heading in the wrong direction. The average cost of borrowing is higher now than it was at the start of the year, and this is putting off many would-be buyers.

“The Nationwide’s research shows 41% of prospective first-time buyers have put their plans on hold because mortgage costs are too high, and this pattern is being repeated across the market.

“The second is the oversupply of homes for sale in many areas. The  flurry of activity seen at the start of the year opened the floodgates for many would-be movers who had been holding off on putting their home on the market.

“The current surge in supply, coupled with wobbling demand from buyers whose affordability is being stretched to the limit by stubbornly high mortgage interest rates, is pushing prices down in many parts of the country.

“On the flipside, buyers who are less dependent on mortgage borrowing now find themselves in a great position. In many areas they are spoilt for choice and it’s a buyer’s market – meaning they could secure a significant discount on the home they want if they plan and negotiate carefully.

“With the Bank of England not expected to reduce the Base Rate until next month at the very earliest, mortgage interest rates are likely to stay high for some time yet.

“Spring is supposed to be the time when the property market is in full flight. But the combination of fragile demand and abundant supply is likely to hold prices down and favour buyers who can proceed.”

James Briggs, head of intermediary sales at Together, remarked: “The latest drop in house price figures formed more of a grey cloud over the typically busier spring period, with the after effects of previous volatility lingering on. And, with mounting concerns the Bank of England will not be in a position to lower interest rates until August, this may cause some buyers to pause on their property plans in the short-term.

“However, there will still be a considerable cohort who are in a position to press ahead. For those needing to access funds quickly, or find they’re tied up waiting for an existing property to sell, bridging loans could be a good alternative option. Many aspiring homeowners are also utilising schemes like Right-To-Buy and shared ownership to take their first steps onto the property ladder. For these buyers, it’s always good to speak to a mortgage advisor who can provide guidance on your finance options.”

April sees slowing in annual house price growth