House prices fell for a second month in a row as mortgage lenders put up rates, according to a closely-watched survey.

Property values dropped by 0.4pc between March and April, the Nationwide house price index showed, below economists forecasts for a 0.1pc gain.

The average home was worth £261,962, which was 0.6pc higher than the same month last year, a slowdown from the 1.6pc annual increase recorded in March.

Nationwide’s chief economist Robert Gardner said: “The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year. 

“House prices are now around 4pc below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”

Lenders have been putting up borrowing costs, with the number of mortgages with rates of over 6pc rising by 10pc since the start of last month, according to analyst Moneyfacts.

Major lenders including TSB, Halifax and HSBC have increased prices on a selection of their mortgages over the past two weeks as swap rates – the main pricing mechanism for home loans – have continued to rise.

Mr Gardner added:

Recent research carried out by Censuswide on behalf of Nationwide found that nearly half (49pc) of prospective first-time buyers (those looking to buy in the next five years) have delayed their plans over the past year.

Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53pc), but it is also notable that 41pc said that higher mortgage costs were preventing them from buying.

Coupled with this, 84pc of prospective first-time buyers said that the cost of living has affected their plans to buy, for example through having less money each month to save for a deposit. 

Around two thirds (67pc) of respondents currently have between £0 and £10,000 saved towards a deposit. 

With a 10pc deposit on a typical first-time buyer property currently around £22,000, it is not surprising to find that c.60pc of prospective buyers have yet to save more than a quarter of their target deposit.

Interestingly, 55pc of respondents said they would be willing to buy in another part of the country where house prices are cheaper, or where they could buy a bigger property. Inevitably, there is a lot of variation in how far people would be willing to move, but half said they would move more than 30 miles from their current location.

Buying a property in a less expensive area appears to be the most common compromise that prospective buyers will make. Around a third (32pc) said they would consider a smaller property than they wanted, while 28pc would go for a property that needed work doing.