House price growth remained largely stable in June

Newspaper HeadlinesNewspaper Headlines | June 24th | May 24th | |—|—| | Monthly index* | 524.8 | 523.8 | | Monthly change* | 0.2% | 0.4% | | Annual change | 1.5% | 1.3% | | Average price (not seasonally adjusted) | £266,604 | £264,249 | Analysis UK house prices increased by 0.2% in June, resulting in an annual growth rate of 1.5%. Despite this growth, prices remain below the record highs of 2022. Housing market activity has decreased compared to pre-pandemic levels, with the number of transactions involving a mortgage falling significantly. This is attributed to higher financing costs. Rising mortgage rates and reduced affordability are limiting housing accessibility, with borrowers facing mortgage payments that exceed the long-term average of 30% of net income. Regional Performance * Northern Ireland: Strongest performance, with prices up 4.1% year-over-year. * Northern England: Outperforming Southern England, with prices up 2.4% year-over-year. * South of England: Annual price decline of 0.3%. * London: Best performing southern region, with annual price growth of 1.6%. * East Anglia: Worst performing region, with prices falling by 1.8% year-over-year.

* Seasonally adjusted figures (note: monthly % changes are revised when seasonal adjustment factors are re-estimated)

Commenting on the figures, Nationwide chief economist Robert Gardner said:

“UK house prices rose by 0.2% in June, taking seasonal effects into account. This resulted in an annual growth rate that rose from 1.3% in May to 1.5% in June, leaving prices around 3% below the record highs of summer 2022.

Housing market activity remains fairly subdued

“Housing market activity has been largely flat over the past year, with the total number of transactions down around 15% from 2019 levels. The number of transactions involving a mortgage has fallen even further (nearly 25 %), reflecting the impact of higher financing costs. In contrast, the volume of cash transactions is actually about 5% above pre-pandemic levels.

“While earnings growth has been much stronger than house price growth in recent years, this has not been enough to offset the impact of higher mortgage rates, which are still well above the record lows of 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% down payment was 1.3% at the end of 2021, but in recent months it has been closer to 4.7%.

“As a result, housing affordability is still limited. Today, a borrower earning the average UK income and purchasing a typical first-time buyers home with a 20% deposit would have a monthly mortgage payment equal to 37% of net income – well above the long-term average of 30%.

Mixed picture among the regions in the second quarter of 2024

“Our regional house price indices are produced quarterly, with data for the second quarter (the three months to June) showing a mixed picture, with some regions showing a modest recovery in growth but others still seeing annual price declines (see full table on page 4).

“Northern Ireland remained the best performing area, with prices up 4.1% compared to Q2 2023. Across England, prices rose 0.6% compared to Q2 2023, while Wales and Scotland both saw a 1.4% year-on-year increase. Northern England (comprising the North, North West, Yorkshire & The Humber, East Midlands and West Midlands) continued to outperform Southern England, with prices up 2.4% year-on-year.

“Meanwhile, the South of England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a decline of 0.3% year-on-year (the same as the previous quarter). London remained the best performing southern region, with annual price growth of 1.6%. East Anglia was the worst performing region, with prices falling by 1.8% year-on-year.”