British house prices showed a small gain in June from May but the impact of higher borrowing costs is still weighing on the property market, mortgage lender Nationwide says.
Nationwide said that UK house prices rose by 0.2% in monthly terms and were 1.5% higher than in June last year.
Britain’s housing market boomed during the coronavirus pandemic but it has slowed after the Bank of England pushed interest rates last year to their highest level since 2008.
Prices as measured by Nationwide are around 3% lower than their record high two years ago.
Housing market activity remains fairly subdued
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, 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.
“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 five-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%.
He added: “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.”
Mixed picture amongst the regions in Q2 2024
The picture varied across UK regions with some regions seeing a modest pick up in growth, but others still recording annual price declines.
Northern Ireland remained the best performing area, with prices up 4.1% compared with Q2 2023. Across England overall, prices were up 0.6% compared with Q2 2023, while Wales and Scotland both saw a 1.4% year-on-year rise. Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands), continued to outperform southern England, with prices up 2.4% year-on-year.
Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 0.3% year-on-year fall.
London remained the best performing southern region with annual price growth maintained at 1.6%, while East Anglia was the weakest performing region, with prices down 1.8% year-on-year.
