UK house prices rise in June, despite high mortgage rates

Period terraced houses in a historic residential suburb of York, UK Average house prices

Average house prices hit £266,604 in June 2024, up from £264,249 a month before. (PaulMaguire via Getty Images)

The average UK house price continued to tick up in June, despite high mortgage rates, with the annual rate of growth rising from 1.3% in May to 1.5%, according to Nationwide.

Average house prices hit £266,604 in June 2024, up from £264,249 a month before.

The market is heading back towards all-time highs, although prices are still around 3% lower than the peak recorded in summer 2022.

High borrowing costs means cash is king in the current market. Cash transactions were around 5% above pre-pandemic levels.

The total number of transactions was down by around 15% compared with 2019 levels. Transactions involving a mortgage were down by nearly 25%, Nationwide said.

Chart: NationwideChart: Nationwide

Chart: Nationwide

And inflation is still in the Bank of England’s crosshairs, despite the fact that a key reading saw it at Threadneedle Street’s target rate of 2% earlier in June. Interest rates have been held at 5.25%, a 16-year high, with hints of a summer rate cut continuing to filter into the bank’s narrative. Part of the equation has been looking at wage growth fuelling price rises elsewhere in the economy.

“While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic,” said Robert Gardner, Nationwide’s chief economist.

“For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.”

As a result, housing affordability is still stretched, Gardner noted. “Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay — well above the long run average of 30%.”

Meanwhile, the election has been cited as a distraction, as market watchers hold their breath for housing policy.

Read more: UK house prices stall amid high mortgages

“The general election announcement definitely triggered a drop-off in demand, at least in the first half of June,” said Emma Jones, managing director at mortgage broker When The Bank Says No.

“It’s likely people were watching the debates rather than scrolling through Rightmove (RMV.L). But when a number of lenders started to lower rates towards the end of June, the market got its mojo back and demand picked up sharply.”

Regionally, Northern Ireland saw the biggest growth in house prices in June, with property up 4.1% compared with the same time a year ago. East Anglia was the weakest performing region, with prices down 1.8% over the year.

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