UK house price growth stalled for a second consecutive month in June, with the average price of a typical home edging down to £277,484 from £278,024 in May, according to Nationwide. The flatlining figures, which followed a 0.6% month-on-month fall in May, came as rising interest rates triggered by the war in Iran dampened homebuyer demand.
Economists had forecast a small monthly rise of 0.1% in June. The stagnant growth hit shares in housebuilders, with Barratt Redrow falling 1.6%, Persimmon dipping 0.5%, and Berkeley dropping 1.4% in early trading on Wednesday.
Despite the monthly decline, annual house price growth increased to 2.2% in June, up from 1.7% in May. Nationwide data also showed an increase in annual house prices in all UK regions in the second quarter, with Northern Ireland leading at 8.6% year-on-year growth, followed by Scotland and Wales at 3.5%, and London at 1.6%.
Mortgage rates remain elevated, with the average two-year fixed rate at 5.53% and the five-year fixed rate also at 5.53%, up from 4.83% and 4.95% respectively at the start of March. However, easing oil prices, with Brent crude falling to $73 a barrel from a peak of over $120 this year, could lead to lower mortgage rates if the Bank of England refrains from further rate hikes.
Robert Gardner, chief economist at Nationwide, noted that if the energy shock continues to subside, the Bank may not need to raise rates as much as previously anticipated, a view reinforced by lower-than-expected UK inflation in recent months. Estate agents warned of a quieter, price-sensitive summer, with activity expected to firm again in the autumn once buyers have more clarity on rates and geopolitical tensions ease.
