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The National House Price Index for June (and Regional House Price Indexes for Q2) are now out.
Taking seasonal factors into account, we see that UK house prices rose 1.5% year-on-year in June. This raised the annual growth rate from 1.3% in May to 1.5% in June, leaving prices around 3% below the all-time high recorded in summer 2022.
Heading | June 24th | May 24 |
Monthly Index* | 524.8 | 523.8 |
Monthly change* | 0.2% | 0.4% |
Annual changes | 1.5% | 1.3% |
Average price
(Not seasonally adjusted) |
Housing market trends have remained fairly stable over the past year, with the number of transactions down by about 15% compared to 2019. Transactions involving mortgages have declined even further (by about 25%), reflecting the impact of rising borrowing costs. In contrast, the volume of cash transactions is actually about 5% above pre-pandemic levels.
Robert Gardner, chief economist at Nationwide, said: “Income growth has been much stronger than home price growth in recent years, but this has not been enough to offset the impact of rising mortgage rates, which are still well above the record lows they hit in 2021 during the pandemic. For example, interest rates on a five-year fixed-rate mortgage for a borrower with a 25% down payment were 1.3% in late 2021, but have been approaching 4.7% in recent months.”
“As a result, the ability to afford a home remains under pressure. Currently, a borrower on the average UK income purchasing a typical first-time buyer property with a 20% deposit would face a monthly mortgage payment equivalent to 37% of their take-home income – well above the long-term average of 30%.”
Nationwide said the second quarter of 2024 was a mixed bag across regions, with some areas seeing a modest recovery in growth while others continued to see annual price declines.
Northern Ireland continues to be the best-performing region, with prices up 4.1% compared to Q2 2023. Across England as a whole, prices increased 0.6% compared to Q2 2023, with Wales and Scotland both recording increases of 1.4% year-on-year. Northern England (comprising the North, North West, Yorkshire & the Humber, East Midlands and West Midlands) continued to outperform Southern England, with prices increasing 2.4% year-on-year.
Meanwhile, the South of England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw prices fall 0.3% year-on-year (the same as the previous quarter). London remained the best-performing of the southern regions, maintaining its annual price growth at 1.6%. East Anglia was the worst-performing region, with prices falling 1.8% year-on-year.”
Industry response:
Jeremy Leaf, a north London estate agent, said:“Early spring optimism has all but evaporated as it became clear mortgage rate cuts would be delayed. This reliable indicator of the housing market’s health shows that the election announcement had little impact on prices or activity, highlighting the more important role of cash purchases.
“Now that inflation has started to fall, hopes are growing that the base rate cut may not be postponed for much longer after all.”
Nathan Emerson, CEO of Propertymark, said: “While interest rates currently remain elevated, it is particularly positive news to see the housing market making further progress year-on-year and home affordability and confidence returning. The housing market will likely thrive further once the political situation has fully settled following the general election. Propertymark is keen to hear policymakers’ plans for how to kick-start the new government’s proposed homebuilding programme, as well as find out more about support programmes for first-time homebuyers.”
Verona Frankish, CEO of Yopa, commented: “While rising mortgage rates continue to restrict market activity to some extent, it is clear that the hold on base rates since September last year has provided the stability needed to stabilise the market and create a strong foundation for growth.”
“Interest rates are very likely to be cut in the coming months, which could encourage more home-buying activity and lead to faster home price growth.”
Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market’s seasonal recovery this spring has been somewhat muted, with high mortgage rates and uncertainty surrounding the election holding back demand. We believe the new government and the first interest rate cut since March 2020 will inject further energy from the summer onwards, leading to UK prices growing by 3% in 2024.”
Guy Gittins, CEO of Foxtons, commented: “An election may be looming, but it is doing little to deter the increased market activity we have seen in recent months, with UK house prices continuing to show signs of strength.”
“It’s clear that homeownership remains a key priority and so far this year we’ve seen a notable increase in both the number of buyer enquiries and the number of sales agreements concluded.
“Regardless of which party wins this Thursday, we expect the market to remain robust and, with further base rate cuts in sight, we expect the UK housing market to be very busy towards the end of the year.”
Ruth Beaton, co-founder of HomeSalesPack, said: “Market activity remains somewhat subdued, primarily due to the fact that mortgage rates remain significantly higher than in past years. However, there is no doubt that momentum is beginning to pick up. Not only are home prices increasing on an annual basis, but this positive growth rate is beginning to accelerate.”
“We expect positive home price growth to strengthen as the year progresses, especially since it’s now a question of when interest rates will be cut, not if.”
Mark von Grundherr, Director at Benham & Reeves, commented:The latest home price data provides concrete evidence that the market is heading in the right direction, and while we are still in a “run before you walk” situation, this year is shaping up to be a much more prosperous one in terms of both home price growth and overall market activity levels.
“This week’s general election is unlikely to slow this momentum, but it is likely to gain momentum depending on who wins and what housing market measures they introduce.”
Maeve Ward, intermediary sales director at Together, commented: “We are delighted to be able to offer this property to our clients. “Prices are rising again and showing some resilience, but the market is in a very interesting place at the moment.
“With the Bank of England keeping interest rates on hold again, many first time buyers, home relocators and investors waiting in the wings may delay their plans further. However, some may see this as an opportunity, with some banks slashing interest rates to jump on property deals.”
House prices are 8% overvalued, says Zoopla