UK house price growth has hit the brakes for a second consecutive month in June, with the average cost of a home barely budging at £277,484. The figures from Nationwide come as a surprise, given economists' earlier predictions of a 0.1% monthly increase. Instead, prices remained largely flat, following a 0.6% fall in May.
The stubbornly high interest rates continue to be the main obstacle for homebuyers. Mortgage rates have reduced slightly in recent days, mirroring the return of oil prices to pre-conflict levels, but they remain significantly higher than before the Iran conflict began. Moneyfacts reported that the average two-year fixed mortgage rate stands at 5.53%, a considerable rise from 4.83% at the start of March.
Estate agents are noticing a shift in buyer behaviour, with families taking a more cautious approach to buying homes ahead of the new school year. Amy Reynolds, head of sales at London agency Antony Roberts, described it as a 'quieter, price-sensitive summer', with buyers waiting for greater clarity on interest rates and geopolitical factors before making a move.
Major UK housebuilders are feeling the pinch, too. Shares in companies such as Barratt and Redrow dropped by 1.6% and 0.5% respectively in early trading on Wednesday, while Berkeley saw a 1.4% decline. This market reaction underscores investor concerns about the outlook for new home sales and property values.
While the monthly stall is concerning, Nationwide's figures also reveal some resilience when viewed annually. The price of a typical house rose by 2.2% in June compared to last year, an acceleration from the 1.7% annual rise recorded in May. Northern Ireland led this growth with an 8.6% year-on-year increase, followed closely by Scotland and Wales at 3.5%, and London with a 1.6% rise.
Robert Gardner, Nationwide's Chief Economist, suggested that easing oil prices could mean the Bank of England may not need to raise interest rates as much as previously anticipated, potentially leading to lower mortgage prices in the future.