- Annual house price growth rose to 3% in April, from 2.2% in March (source: House price growth remained resilient in April | Nationwide)
- The average house now costs £278,880
- How using a Lifetime ISA could help
Sarah Coles, head of personal finance at AJ Bell, comments:
“Momentum is powering the property market through a particularly sticky period, but it’s only going to take house prices so far. Property prices were up 0.4% in April on a monthly basis, despite the toll the Iran war has taken on consumer confidence, the cost of living and mortgage rates.
“Affordability has helped. House prices have been rising way behind wages for some time now, so the house price to earnings ratio is back around the 25-year average, after over a decade above it. This has made it easier for new buyers to raise a deposit, and for people to dream of owning their own home.
“Unfortunately, higher mortgage rates could throw a spanner in the works. They have risen significantly since the onset of the Iran war. It hasn’t been a straight line up, but they remain higher. At a time when we’re expecting other everyday prices to start rising faster, more expensive mortgages could be the final straw for many property-buying dreams. RICS figures showing buyer demand dropped in March is a decent indication that the coming months could be less positive.
What can you do?
“If you’re in the market for a new home and keen to buy, fewer buyers looking for homes could put you in a decent position to negotiate a better deal.
“If you’re not under huge time pressure to buy, you have the opportunity to take stock. Consider whether you can get yourself in a better financial position to buy when the time is right.
“That could mean using this year’s Lifetime ISA allowance to beef up your deposit – with the help of the government bonus. If you have time on your side, then it could also be an opportunity to invest using your Lifetime ISA to help build up your pot before taking the plunge.
“Or it could mean making sure you have a decent safety net of savings to fall back on, so you can get through the expenses of buying and selling, and still be in a position to weather any unexpected emergencies that crop up. Because while the coming months could see a trickier time for the property market, it doesn’t have to mean the same for you.”