House prices grew by 1.5% in June compared with a year ago, Nationwide’s latest House Price Index has revealed.
On a monthly basis, prices edged up by 0.2%, to an average of £266,064, compared with £264,249 in May.
Regionally, Northern Ireland was the best performing region, with prices up by 4.1% in Q2 alone.
On the other end of the spectrum, East Anglia was the weakest performing region, with prices down 1.8% over the year.
Robert Gardner, chief economist at Nationwide, said: “UK house prices edged up by 0.2% in June, after taking account of seasonal effects.
“This resulted in the annual rate of growth rising from 1.3% in May to 1.5% in June, leaving prices around 3% below the all-time high recorded in the summer of 2022.
“Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels.
“Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs.
“By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels.”
He added: “While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic.
“For example, the interest rate on a 5-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.
“As a result, housing affordability is still stretched.
“Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay – well above the long run average of 30%.”
Reaction:
Nathan Emerson, CEO of Propertymark:
“It’s especially positive news to see further progression within the housing market year on year, with affordability and confidence returning, despite interest rates remaining high currently.
“Once the political climate fully settles down following the general election, the housing market will hopefully see yet more buoyancy.
“Propertymark remains keen to see plans from policymakers as to how any incoming government intends to kick start their proposed house building ambitions, as well as learn more regarding any programme of support for first-time buyers.”
Nicholas Finn, managing director of Garrington Property Finders:
“Whether it’s pre-election uncertainty or summer sluggishness, the effect is much the same – large parts of the property market are in a holding pattern.
“Housing market activity remains largely flat according to the Nationwide, and many estate agents report that enquiries cooled further in June as some prospective buyers opted to put things on hold until the make-up of the next Government is known.
“But the Nationwide’s analysis does reveal one section of the market where activity is buzzing – purchases by cash buyers are up by 5% compared to their pre-pandemic level.
“While cash is still king, purchases by buyers who need a mortgage are down by almost a quarter, reflecting the high cost of borrowing and the squeeze on what many people can afford.
“While the summer holidays are traditionally a sluggish time for sales, this year’s back to school bounce is likely to come earlier and be stronger than in recent years.
“With the first cuts to interest rates now potentially just a month away, cheaper mortgages coupled with the return of some political stability could make business very brisk in August.
“For now, the pre-election hiatus has mostly favoured buyers.
“Those pressing on with their plans to move are finding plenty of supply, less competition from other buyers and many sellers willing to discuss a price reduction in return for the certainty of a sale.
“But this delicate equilibrium is unlikely to last.
“With both the economy and consumer confidence growing again and thousands of would-be buyers primed and ready to jump back into the market as mortgages become cheaper, the stage is set for a very busy Autumn.”
Michelle Stevens, mortgage expert at finder.com:
“As expectations of an upcoming base rate cut continue to grow, the market seems to be stabilising in anticipation of lower rates on the horizon.
“Although prices only edged up very slightly last month, over the last couple of weeks we’ve seen a few of the major banks reduce their mortgage rates, and this will no doubt help provide a much needed boost to confidence in the housing market.
“If more banks follow suit, I’m hopeful that this could trigger a price war amongst mortgage lenders, which would be great news for buyers and the millions of people who are due to renew their mortgage this year.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“This is the last litmus test on the state of the property market before the General Election and it is fair to say that while challenges remain, stability has returned to house prices in recent months.
“A modest rise in June follows the trend of steady price growth we have seen since the start of the year.
“While some may argue prices are stagnating, affordability concerns still loom for many Brits and there is a delicate balance to appease buyers and sellers alike.
“The regional picture is more mixed and we are seeing a greater adjustment in house prices happening in the South, where prices in many areas have been inflated for years.
“Meanwhile, regions in the North of England have seen higher levels of demand, creating a market that favours sellers.
“We would like to see first-time buyers being prioritised in the coming months, regardless of which party forms the next Government.
“While house price growth is welcome news for sellers, it undeniably makes it harder for those still saving for a deposit to get on the property ladder.
“A renewed push to ramp up the rate of homebuilding would be a good place to start, particularly for properties that are considered more affordable.
“There is also the possibility that we may see a new help-to-buy scheme rolled out in the near future, which would go a long way towards encouraging potential buyers to get saving.”
