UK House Prices Rose Again in April, Nationwide Says

Nationwide said average house prices increased 0.4%, extending March's 0.9% gain. Photo by Jason Alden /Bloomberg

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(Bloomberg) — UK home values unexpectedly strengthened in April, according to one of the country’s largest lenders, suggesting the housing market remained resilient even as the Iran war pushed up mortgage rates.

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Nationwide Building Society said average house prices were up 0.4% to £278,880 ($379,000), extending March’s 0.9% gain, which itself had been the largest increase since 2024. April’s rise also defied a 0.3% decline expected by economists.

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The report suggests home-buyers have been relatively unfazed by a jump in borrowing costs, after the Middle East conflict replaced hopes of interest rate cuts with fears they may need to rise again to prevent a price shock. The Bank of England voted to keep borrowing costs on hold on Thursday, but officials signaled they may need to turn to rate rises over the summer if energy disruptions continue.

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On an annual basis, house prices were up 3%, picking up pace from last month.

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“The market is likely being supported by the relative strength of household finances,” Robert Gardner, Nationwide’s chief economist, said. “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.“

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Still, Gardner described the increase as “surprising.” So far, evidence on how conflict in the Middle East is affecting the UK housing market has been mixed. While Nationwide is pointing to resilience, a survey of agents said both new buyer enquiries and sales both plunged in March, while expectations for near-term deals have become much more pessimistic. Lender Halifax also reported a decline in home values in the first month of the Middle East conflict.

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Consumer confidence has fallen to its lowest level since 2023, with households saving more to build up emergency funds. At the same time, around half a million households coming off ultra-low mortgage deals are preparing for a sharp rise in borrowing costs. Weak demand is already pushing retailers to offer heavy discounts to attract shoppers, according to the British Retail Consortium.

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Rob Wood, chief UK economist at Pantheon, said the Nationwide figures are “a sign that consumers weathered the initial storm well.” However, it’s “unlikely that house prices can keep up this pace,” he added.

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In an interview with Bloomberg TV’s Francine Lacqua on Thursday, Governor Andrew Bailey stressed that a key question for rate-setters is whether the energy price shock will feed through given the “softer backdrop” of the jobs market and consumer demand.

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The overall impact will depend on how long the energy shock lasts and how it influences interest rates. Fixed-rate mortgage costs, despite rising in recent weeks, are still below their 2023 peak. Homes remain relatively more affordable than a few years ago, as wages have grown faster than house prices in recent years.

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(Updates with comment, detail throughout)

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