UK house prices edged up by 0.2% in June (taking account of seasonal effects), according to the latest House Price Index from Nationwide. This increase 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.
The average UK houser price (not seasonally adjusted) now stands at £266,604.
Commenting on the figures, Nationwide’s chief economist Robert Gardner said: “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.
“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.”
He added : “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%.”
Peak housing prices
Fine & Country managing director Nicky Stevenson pointed out that the housing market was showing fresh signs of stability.
“The recovery seen in recent months has pushed prices closer to their peak in summer 2022, but there still remains a deficit of approximately 3%.
“Buyers continue to face significant headwinds with higher borrowing costs impacting turnover, but the outlook for the rest of the year does look brighter with interest rates set to fall.”
She added: “The challenge for the incoming government is to inject life back into the housing market in the south of England, where activity has been largely subdued for some time. “
MT Finance director Tomer Aboody commented: “A slight change but the market was mostly stable in June, which is a reflection of overall recent sentiment, with interest rates remaining steady along with inflation reducing.
“We are possibly looking at a reduction in interest rates shortly which will inevitably lead to a price and activity increase in the housing market.
Propertymark chief executive Nathan Emerson said it was 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.”
