Nationwide boss shares ‘surprise’ update for UK households | Personal Finance | Finance
Britain’s housing market is showing unexpected strength despite global turmoil, with the chief economist of Nationwide insisting households are in their best financial shape for years.
Latest figures reveal house price growth picked up to 3.0% in April, up from 2.2% in March, while prices rose 0.4% month on month. The average property is now valued at £278,880. The resilience comes even as the fallout from tensions in the Middle East, including the Iran conflict, has rattled confidence and pushed up energy costs.
Robert Gardner admitted the strength of the market has taken many by surprise. He said: “It is a surprise because we have seen consumer confidence weaken, as you’d expect, given what’s happened in the Middle East and what’s happened to energy prices… and yet we’ve seen the market remain relatively resilient.”
Surveys show buyer demand has cooled and sentiment has dipped, but prices have continued to edge higher – suggesting deeper forces are at play.
According to Mr Gardner, the key factor is the improving health of household finances.
He told BBC Radio 4 Today: “We’ve got debt levels at their lowest for about two decades. We know real incomes have made up all the ground that was lost during the cost of living crisis.”
This combination of lower debt burdens and rising incomes has helped shield homeowners and buyers from economic shocks.
Crucially, affordability has also improved.
Income growth has outpaced house price rises by a “significant margin”, while mortgage rates have fallen back from their 2023 peaks.
Although borrowing costs have ticked up slightly in recent weeks, Mr Gardner stressed they remain far below the highs seen two years ago and broadly in line with 2024 levels.
He said: “Even though affordability has deteriorated a little bit compared to where we were a few months ago, it’s still looking fairly comfortable.”
The outlook, however, hinges on how long the current energy shock lasts.
Mr Gardner warned that economic growth could weaken and inflation rise if higher oil and gas prices persist, but added there are grounds for optimism.
He said: “The housing market has been pretty resilient to shock so far, so hopefully that’s what we’ll see.”
The figures suggest that, for now at least, Britain’s homeowners are weathering the storm, helped by stronger balance sheets and rising incomes, even as global uncertainty clouds the outlook.
Looking ahead, he said: “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.
“However, the UK economy and housing market have proved remarkably resilient in recent years.
“This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived.”
