Average house price reaches a record high of £238,831 in April

The housing market continued to boom during April, as the latest Nationwide House Price Index figures show that the average house price has reached a record high of £238,831 this month, up £15,916 over the past 12 months.

April saw house prices rise by 2.1% compared to the previous month, which could be due to the extension of the stamp duty holiday. Robert Gardner, chief economist at Nationwide, said: “Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a reacceleration in April.

“However, our research suggests that while the stamp duty holiday is impacting the timing of housing transactions, for most people it is not the key motivating factor prompting them to move in the first place. For example, among homeowners surveyed at the end of April that were either moving home or considering a move, three-quarters said this would have been the case even if the stamp duty holiday had not been extended.”

Gardner predicts that the housing market will “likely remain fairly buoyant over the next six months”, citing a combination of the stamp duty extension, Government support for workers such as through the furlough scheme, along with competitive mortgage rates as reasons for the continued growth.

He added: “With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year. Indeed, if house prices remain flat in month-on-month terms over the next two months, the annual rate of growth will reach double digits in June.

“Further ahead, the outlook for the market is far more uncertain. If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply.

“However, shifts in housing preferences may continue to support activity, even if labour market conditions weaken. Indeed, at the end of April, 25% of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic, only modestly below the 28% recorded in September last year. Given that only around 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”

April also saw the launch of the Government’s mortgage guarantee scheme, which saw many well-known high street lenders, such as NatWest and RBS, re-introduce mortgages for those with a 5% deposit (95% loan-to-value) under the scheme. 

Although this scheme will provide some help for first-time buyers struggling to get onto the property ladder, especially as house prices continue to rise, experts have urged those with a small deposit to also consider mortgage deals outside the scheme as they may provide more competitive rates. Those looking to buy a property with a small deposit may want to consider speaking to a mortgage broker, who will be able to highlight the best deals available for their circumstances.