Summary

House prices rose slightly in April, according to Nationwide, partially reversing the previous month’s fall. The 0.2% rise in April is in line with average monthly growth over the past 2 years, and with our forecast for UK house price growth of 1.0% in 2018. Surveyor price expectations have dropped to their lowest level since 2012, according to the RICS survey.

This modest national average masks a more positive picture across most of the country. Transaction levels appear stable across most regions and are higher than they were three years ago. Activity levels and price growth remain weakest in the south and particularly in London, where there were 22% fewer transactions over the last year compared to the same period three years ago. London is also expected to see an economic slowdown in 2018, narrowing the growth gap between the capital and the rest of the country. But surveyor sentiment about supply and demand stabilised in April. The RICS survey suggests the downward trajectory of market activity in London may be coming to an end: surveyors reported rising demand for the first time in a year.

Despite some improvement in surveyor sentiment, the GfK consumer confidence survey recorded the 28th consecutive month of negative outlook by consumers on their personal finances in April. This followed the announcement of disappointing Q1 2018 GDP growth of only 0.1%. The ‘Beast from the East’ gets the blame for this loss of productivity, prompting Oxford Economics to revise their annual GDP growth estimate down from 1.7% to 1.5%. These poor results led the Bank of England not to make the anticipated base rate hike in May, leaving it at 0.5%, with commentators now expecting the next rise in August.