UK house prices rose slightly in June compared with 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.
The British housing market boomed during the coronavirus pandemic but 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 past year, with the total number of transactions down around 15% on 2019 levels. Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of rising borrowing costs.
“While earnings 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 the record lows seen in 2021 as a result 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% 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 regions of the UK, with some regions seeing a slight recovery in growth, while others are still seeing an annual fall in prices.
Northern Ireland remained the best performing region, with prices up 4.1% compared to Q2 2023. Across England, prices increased by 0.6% compared to Q2 2023, while Wales and Scotland both saw increases 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% year-on-year.
Southern 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.
