House prices hold steady in June - Nationwide

UK house prices held steady in June, industry data showed on Friday, despite the mounting cost of borrowing.

According to the latest Nationwide house price index, house prices nudged 0.1% higher over the month in June, reversing May’s 0.1% dip. Annually, prices fell 3.5%, marginally worse than May’s 3.4% decline.

The average house price now stands at £262,239.

Robert Gardner, chief economist at Nationwide, said: “Longer-term interest rates, which underpin mortgage pricing, have increased sharply in recent months, in response to data indicating that underlying inflation in the UK economy is not moderating as fast as expected.

“Longer-term borrowing costs have risen to levels similar to those prevailing in the wake of the mini budget last year, but this has yet to have the same negative impact on sentiment.”

However, he warned that the sharp increase in borrowing costs was likely to exert a “significant drag” on housing market activity in the near term.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The stability of Nationwide’s measure of house prices in the second quarter largely reflects the boost to affordability from the fall in new mortgage rates during the spring, which recently has been completely reversed.

“Timelier measures point to a renewed decline in prices in the third quarter.

“The jump in mortgage rates also likely will increase the flow of buy-to-let landlords selling up, which will lead to faster increase in the stock of unsold properties and a strengthening of buyers’ ability to negotiate discounts.

“Earlier this month we revised our forecast for the peak to trough decline in house prices to 10% from 8%; this downward trend has further to run.”

The Bank of England has increased interest rates 13 times since December 2021, to stand at 5%.