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UK House Price Growth Slows from 18-Y High, Nationwide Says

LONDON, April 29 (Reuters) - British house prices rose less than expected this month after expanding in March at the fastest pace since 2004, figures from mortgage lender Nationwide showed on Friday.

Annual price growth slowed to 12.1% in April from March's 18-year peak of 14.3%, after a 0.3% monthly increase which was the smallest since September and well below economists' average forecast in a Reuters poll for a 0.8% rise.

Nationwide said prices were being supported by a strong job market, but it expected momentum to weaken this year due to stretched affordability and falling real incomes as pay fails to keep up with inflation.

"We continue to expect the housing market to slow in the quarters ahead," Nationwide chief economist Robert Gardner said.

"Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates," he added.

Most economists expect the BoE to raise interest rates to 1% on May 5, the highest since 2009, and financial markets see interest rates reaching 2.25% by the end of the year, to tackle the highest rate of inflation in 30 years.

Martin Beck, chief economic adviser to EY ITEM Club, said a "serious correction" in British house prices looked unlikely.

"Current economic pressures weigh heavier on low-income households, who disproportionately rent, than the better-off, who are primarily owner-occupiers," he said.

British house prices, like those in many other Western countries, rose sharply after an initial lull at the start of the COVID-19 pandemic, as many richer households looked for more space to support working from home.

Nationwide said the proportion of people looking to move house was higher than a year ago, but the proportion looking to move away from cities had fallen to 12% from 25%, based on a survey of 3,003 people it conducted this month.

The average house price in April was 267,620 pounds ($335,435), up from 222,915 pounds two years earlier at the start of the pandemic.

($1 = 0.7978 pounds)

Reporting by David Milliken; editing by William James and Gareth Jones

Source: Reuters

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