Average UK house prices hit record high in June
The growth of UK house prices slowed this month, an index shows, as the weakening economy, cost of living squeeze, and rising interest rates cooled the market.
Prices were up by 10.7% in June, slowing from 11.2% in May, Nationwide building society said.
Prices rose by 0.3% in June, a notable slowdown on May’s 0.9% house price inflation – but still the 11th monthly rise in a row.
The average UK house price hit a new record high in June but there are “tentative signs of a slowdown”, according to an index.
Across the UK, the average house price in June rose to a record £271,613, up by 0.3% month on month. That was a slowdown on May’s 0.9% increase on April – but still the 11th monthly rise in a row.
Robert Gardner, Nationwide’s chief economist, said average prices had risen by more than £26,000 in the past year, adding: “There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries.
“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low. Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months.”
Gardner said that, at the same time, the stock of homes on the market has remained low, keeping an upward pressure on house prices.
“The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year,” he said. “Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”
Looking across the UK, Gardner said quarterly figures showed a softening of house price growth in many regions in the three months to June.
“The south-west [of England] overtook Wales as the strongest-performing region in quarter two, with house prices up 14.7% year on year, a slight increase from the previous quarter. This was closely followed by East Anglia, where annual price growth remained at 14.2%.”
London remained the weakest-performing UK region, with annual price growth slowing to 6%, from 7.4% in the previous quarter.
Myron Jobson, a senior personal finance analyst at Interactive Investor, said: “Property prices have gone up faster than wages, creating an affordability squeeze, while mortgage rates have risen to levels we haven’t seen in a while. These factors, as well as the prospect of higher interest rates to rein in runaway inflation, are likely to go some way towards taming frothy housing prices.”
Gabriella Dickens, a senior UK economist at Pantheon Macroeconomics, said: “We expect house prices to drop by around 2% in the second half of the year, pushing down the year-over-year rate to around 2% by the end of the year.”
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