Key facts
- UK house prices have stalled for two consecutive months, with no growth recorded in June.
- The average price of a UK home decreased to £277,484 in June from £278,024 in May.
- Mortgage rates have risen significantly since March, impacting buyer demand.
- Housebuilder shares experienced a decline following the housing market data.
- Annually, UK house prices rose by 2.2% in June, up from 1.7% in May.
- All UK regions saw year-on-year price increases in the second quarter, led by Northern Ireland.
UK house price growth has stalled for a second consecutive month, with the average price of a typical home falling to £277,484 in June. This follows a 0.6% month-on-month decrease in May, defying economists' forecasts of a small rise. Rising interest rates, influenced by geopolitical events and oil prices, are cited as a primary reason for the slowdown in buyer demand.
Estate agents anticipate a quieter, price-sensitive summer market, with activity expected to pick up in the autumn once there is more clarity on interest rates and geopolitical developments. While mortgage rates have seen a slight dip recently, they remain considerably higher than earlier in the year. The average two-year and five-year fixed mortgage rates are currently around 5.53%, up from below 5% at the start of March.
Specialist lender MT Finance noted that Nationwide's figures indicate a softening market, with valuers cautious and buyers negotiating hard. The consecutive months of flatlining growth have impacted housebuilder stocks, with shares in Barratt, Redrow, Persimmon, and Berkeley falling in early trading. However, on an annual basis, house prices increased by 2.2% in June, an acceleration from 1.7% in May. All UK regions recorded year-on-year price increases in the second quarter, with Northern Ireland showing the strongest growth at 8.6%.
Nationwide's chief economist suggested that easing oil prices could lead the Bank of England to hold off on further interest rate hikes, potentially lowering mortgage costs. This view is supported by recent inflation data coming in lower than expected. A shift in market expectations for future Bank rate movements has already contributed to a decrease in market interest rates underpinning mortgage pricing.