Relative strength of household finances underpinning resilience
UK annual house price growth increased in April, despite uncertainty caused by the Iran conflict and the subsequent rise in energy prices.
According to Nationwide’s latest house price index, prices rose 3% in the year to April 2026, up 2.2% from the equivalent figure a month earlier.
The HPI also recorded a month-on-month rise of 0.4%, bringing the average price (not seasonally adjusted) of a UK home to £278,880 in the April.
Nationwide’s chief economist, Robert Gardner, said it was “somewhat surprising” that the market had “continued to regain momentum following the slowdown recorded around the turn of the year”, particularly given that indicators of consumer confidence had “weakened noticeably”.
GfK’s index of households’ economic outlook has fallen to its lowest level since late 2023, he noted, while the RICS reported a sharp drop in new buyer enquiries in March, which Gardner said was “likely to have been influenced by higher market interest rates following the onset of the conflict”.
Gardner’s assessment of the market’s surprising resilience was that it was being supported by the “relative strength of household finances”, with household debt low and savings buffers high at an aggregate level.
“Moreover, housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in mortgage rates,” he said, adding that the impact of recent increases in market interest rates on affordability had so far been limited.
“Looking ahead, UK economic growth is likely to be somewhat weaker and inflation higher than previously expected as a result of developments in the Middle East, although the ultimate impact will depend critically on the duration of the shock and the policy response,” he said.
However, he said that the “remarkably resilient” nature of the market in recent years provided some confidence that if the shock from the conflict passed quickly, any “near-term softening in the housing market will also prove short lived.”
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