The average house price in April reached a record high of £267,620 across the UK — around £2,000 more than the average price in March.
The pace of annual house price growth slowed slightly to 12.1% in April, slightly down from 14.3% in March, Nationwide Building Society said.
Property values increased by 0.3% month-on-month, with the average price rising to a record £267,600 this month from March’s £265,312. House prices are up by almost £29,000 from April last year.
Nationwide said prices were being supported by a strong job market, but it expects momentum to weaken this year due to stretched affordability and falling real incomes as pay fails to keep up with inflation.
Robert Gardner, Nationwide’s chief economist, said: “Housing market activity has remained solid with mortgage approvals continuing to run above pre-COVID levels.
“Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.”
Gardner said people’s expectations of their own personal finances over the next 12 months have “dropped to levels last seen during the depths of the global financial crisis more than a decade ago”.
He added: “Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased (though they remain low by historic standards).”
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said the slowdown in growth is "unsurprising, given that real incomes dropped sharply and mortgage rates surged".
"We think that house price growth will continue to slow from here," she added, noting that mortgage rates are likely to continue to rise, and real disposable incomes look set to fall further — both against a background of high inflation and a higher tax burden.
A survey of around 3,000 people for Nationwide this month indicated 38% across the UK were either in the process of moving or considering a move.
Private renters were the most keen on a move, with 45% looking for new homes, but it was also elevated amongst those living with family (44%) and those owning their own home.
There was a split between people owning their property outright (30%) and those owning with a mortgage (42%).
Myron Jobson, senior personal finance analyst at Interactive Investor, said: "Mortgage affordability is a growing concern.
"The window for cheap mortgages is closing rapidly and the spectre of higher interest rates means that mortgage rates are likely to return to levels we haven't seen in a while.
"Higher mortgage rates also mean that fewer homeowners are in the position to refinance to save money by getting a lower interest rate.
"However, rapidly climbing mortgage rates could be the undoing of the surge in property values, forcing home shoppers to back off a bit. The burning question is when will this manifest.
"If the housing market does slow, it could allow inventory levels to rise and, in turn, result in a transition to a market with lower levels of home price growth.
"The picture is still fuzzy, as economic and geopolitical uncertainty stemming from Russia's devastating invasion of Ukraine are difficult to predict."