House prices reached a new record high of on average in April, according to an index.
Property values edged up by 0.2% month on month, reversing a 0.2% dip seen in March, according to figures from Nationwide Building Society.
The annual pace of UK house price growth also accelerated to 2.6%, from 2.1% in March.
House prices increased to a record high of £213,000 across the UK on average in April, Nationwide Building Society has said (Andrew Matthews/PA)
Robert Gardner, Nationwide’s chief economist, said: “Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.
“Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year.
“We continue to expect house prices to rise by around 1% over the course of 2018.”
Mr Gardner said the share of cash transactions in the housing market has fallen slightly over the past 18 months – although cash buyers still account for around a third of sales.
He suggested the decrease is partly due to the introduction of an additional stamp duty levy for people buying second homes and rental properties, a large proportion of which tend to change hands using cash.
Mr Gardner continued: “In recent years, we have seen a recovery in first-time buyer transactions, which are now broadly in line with pre-crisis levels.
“The easing in credit availability, including schemes such as Help to Buy, have helped boost activity. Meanwhile, home-mover activity has remained relatively subdued, in part due to the lack of stock on the market.
“Buy-to-let purchases have fallen as a share of total transactions since 2016.”
Howard Archer, chief economic adviser at EY Item Club, said: “It is very possible that housing market activity – and possibly prices – were adversely impacted in March by the severe weather that particularly occurred during the month.
“Even so, the current softness of the housing market runs deeper than that.”
He continued: “We continue to expect price gains over the year will be limited to a modest 2%.
“The fundamentals for house-buyers are likely to remain challenging.
“Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing.
“Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.
“House-buyers will also likely be concerned about further interest rate hikes over the coming months.”
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