Over the year to June, house price growth improved slightly at 2.2% annually compared to 1.7% in May.
However, with the average UK property price standing at £278,024 in May, June looked slower for the housing market.
Robert Gardner, chief economist at Nationwide, said this was not surprising given that the market has slumped slightly in recent months due to uncertainty due to events in the Middle East and the subsequent rise in energy prices and market interest rates.
“In fact, consumer confidence and housing sentiment metrics weakened, and mortgage approvals fell significantly in May,” he added.
“While geopolitical tensions remain high, the signing of a memorandum of understanding between Iran and the United States has helped push oil prices towards levels prevailing before the conflict began.
“If the energy shock continues to ease, the Bank of England may not need to raise interest rates, or at least at a lower rate than previously expected – a view reinforced by the fact that UK inflation has also been lower than expected in recent months.
“In recent weeks, a shift in market expectations of the future path of the bank rate has helped bring down market interest rates that support fixed-rate mortgage rates.
“If these trends are maintained, they will help restore household confidence and ease constraints on affordability, paving the way for a recovery in housing market activity in the coming quarters, provided that domestic political uncertainty does not negatively impact sentiment.”
A careful analysis of the UK regions once again highlighted Northern Ireland as the exception to the flat price growth trend. It saw prices rise by 8.6% over the year, four times faster than the UK as a whole.
“This continued strong performance has seen housing affordability in the region deteriorate, in contrast to the UK average, which has been generally improving,” Gardner said.
This means that the mortgage payment on a first-time property buyer in Northern Ireland is now equivalent to 31% of the average take-home wage. This is up from 24% at the same time in 2022. However, it is still below the UK average of 33%.
The price of a typical house in Northern Ireland is now around 80% of the average price in the UK.
Both Scotland and Wales saw annual house price growth rise slightly to 3.5%, while in England the rise was a more modest 1.5%.
South-east England saw “more modest” rises of 0.1%.
How have prices affected real estate sales and purchases?
According to estate agent Amy Reynolds, head of sales at Richmond Estate Agency Anthony Roberts, the picture is more accurate for those who buy and sell homes.
“There is real caution at the more price-dependent end of the market, but a large proportion of buyers have cash or equity-rich funds, and well-priced, on-road family homes continue to attract competitive interest,” she said.
“There is a familiar pre-summer push of families wanting to settle down before the new school year, but the mood is steady and eclectic rather than buoyant or procrastinating.
“We expect a quieter, more price-sensitive summer, with activity leveling off again in the fall once buyers have more clarity on interest rates and geopolitical noise fades.”
About the Author
