The Nationwide House Price Index for June (and Q2 regional) has just been released.

It shows that UK house prices edged up 1.5% in June compared with a year ago, after taking account of seasonal effects. This resulted in the annual rate of growth rising from 1.3% in May to 1.5% in June, leaving prices around 3% below the all-time high recorded in the summer of 2022.

Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels. Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels.

Robert Gardner, Nationwide’s Chief Economist, said: “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. 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. 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%.”

According to Nationwide, it was a mixed picture amongst the regions in Q2 2024, with some regions seeing a modest pick up in growth, but others still recording annual price declines.

Northern Ireland remained the best performing area, with prices up 4.1% compared with Q2 2023. Across England overall, prices were up 0.6% compared with Q2 2023, while Wales and Scotland both saw a 1.4% year-on-year rise. Northern England (comprising 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 southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 0.3% year-on-year fall (the same as last quarter). London remained the best performing southern region with annual price growth maintained at 1.6%. East Anglia was the weakest performing region, with prices down 1.8% year-on-year.”

Industry reaction:

Nathan Emerson, CEO of Propertymark, said: “It’s especially positive news to see further progression within the housing market year on year, with affordability and confidence returning, despite interest rates remaining high currently. Once the political climate fully settles down following the general election, the housing market will hopefully see yet more buoyancy. Propertymark remains keen to see plans from policymakers as to how any incoming government intends to kick start their proposed house building ambitions, as well as learn more regarding any programme of support for first time buyers.”

Verona Frankish, CEO of Yopa, commented: “It’s clear that while higher mortgage rates continue to restrict market activity to an extent, a hold on the base rate since last September has provided the stability needed to steady the ship and provide a strong foundation for market growth.

“With a cut to interest rates looking highly likely in the coming months, the expectation is a further boost to buyer activity and this is likely to increase the speed at which house prices are rising.”

Tom Bill, head of UK residential research at Knight Frank, said: “The seasonal spring bounce in the UK housing market has been a little lacklustre this year, with demand kept in check by high mortgage rates and a degree of uncertainty around the election. A new government and the first rate cut since March 2020 should inject more energy after the summer and we believe UK prices will rise by 3% in 2024.”

Guy Gittins, CEO of Foxtons, commented: “The election may be looming but this has done little to deter the uplift in market activity seen in recent months, with UK house prices continuing to show positive signs of upward growth.

“It’s clear that homeownership remains high on the agenda and so far this year we’ve seen a notable increase both in terms of buyer enquiry levels and the number of sales being agreed.

“We expect that the market will remain resilient regardless of which political party comes out on top this Thursday and, with the addition of a base rate cut on the horizon, we anticipate a very busy end to the year for the UK housing market.”

Ruth Beeton, co-founder of Home Sale Pack, said: “Market activity remains somewhat subdued and this is largely down to the fact that mortgage rates remain substantially higher than they have been in previous years. However, there’s no doubt that momentum is starting to build and not only are house prices up on an annual basis, but this rate of positive growth is starting to accelerate.

“We expect this positive house price growth performance will only strengthen as the year progresses, particularly now that it’s a matter of when, not if, interest rates are cut.”

Marc von Grundherr, director of Benham and Reeves, commented: “The latest house price figures provide concrete evidence that the market is very much heading in the right direction and although it remains a case of not running before we can walk, we look set for a far more prosperous year both with respect to house price growth and overall market activity levels.

“While this week’s general election is unlikely to slow this momentum, there’s a good chance it could add to it, depending on who comes out on top and what housing market initiatives they introduce.”

Maeve Ward, head of intermediary sales at Together, commented: “Prices are up again and show some resilience – but the market is in a very interesting position right now.