UK house prices recorded a slight rise in June compared to May, but the impact of rising borrowing costs is still weighing on the property market, according to mortgage lender Nationwide.
Nationwide said UK house prices rose 0.2% in monthly terms and were 1.5% higher than in June last year.
Britain’s property market boomed during the coronavirus pandemic, but it slowed after the Bank of England last year pushed interest rates to their highest level since 2008.
Prices measured by Nationwide are about 3% below their record level two years ago.
Activity in the real estate market remains fairly moderate
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, said: “Property market activity has remained broadly stable over the last year, with the total number of transactions down around 15% compared to at 2019 levels. Transactions involving a mortgage loan are even down. more (nearly 25%), reflecting the impact of rising borrowing costs.
“Although profit growth has been much stronger than house price growth in recent years, this has not been enough to offset the impact of rising mortgage rates, which are still well above record lows observed in 2021 following the pandemic. For example, the interest rate on a five-year fixed-rate mortgage for a borrower with a 25% down payment was 1.3% at the end of 2021, but in recent months it has moved closer to 4.7%.
He added: “As a result, housing affordability is still limited. Today, a borrower earning the UK average income who purchases a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of the equity in the house. pay. »
A mixed situation depending on the region in the second quarter of 2024
The situation varies across the UK, with some areas seeing a slight recovery in growth, while others are still seeing annual price declines.
Northern Ireland remained the best performing region, with prices up 4.1% compared to the second quarter of 2023. Across England as a whole, prices increased by 0.6% compared to in the second quarter of 2023, while Wales and Scotland both saw a rise of 1.4% year-on-year. The North of England (comprising the North, North West, Yorkshire and the Humber, East Midlands and West Midlands) continued to outperform the South of England, with prices up 2.4 % over one year.
The South of England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a decline of 0.3% year-on-year.
London remained the best performing southern region, with annual price growth held at 1.6%, while the East of England was the worst performing region, with prices down 1.8% year-on-year.
