House price inflation dropped sharply in April dropping to 0.1% for the month compared with 1.1% in March the latest figures from Nationwide claim.
The drop takes annual house price inflation back below 5% in April but Nationwide does not see this as a source of concern saying demand for property has remained stable. The average house price is in the UK now stands at £163,573 a rise of £7,500 compared to the same time last year.
Fionuala Earley, group economist at Nationwide, says while the cooling of prices in April was to be expected given the surge in March. Earley adds while the number of purchase approvals fell back in sharply in February from 121,000 to 115,000 this is still a healthy level of activity and well above the ten year average of 100,000.
"Looking forward, we continue to expect some month to month volatility in the house price numbers as the market settles down after the unseasonably strong winter months and adjusts to the economic conditions on the horizon. While we do not expect any early move in interest rates that would stimulate or dampen the market, there are other economic factors that will affect it through their impact on disposable income and confidence,” she adds.
The price of oil is seen by Nationwide as having the greatest effect on any decision by the Bank of England over interest rates. While on the one hand rising oil prices are likely to put inflationary pressure on the economy and might suggest a rise in the base rate on the other it is likely to effect disposable incomes which may lead to less consumer spending which will create pressure for the rate to be reduced. The labour market, according to Earley, will be key to any decision in the coming months.IFAonline
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