UK house price growth stalled for a second consecutive month in June, as rising interest rates triggered by the conflict in Iran dampened buyer demand and estate agents warned of a summer slowdown. Nationwide reported the average price of a typical home edged down to £277,484 in June from £278,024 in May, defying economists' predictions of a small monthly rise.
The property market is showing signs of caution, with buyers negotiating hard on price. Amy Reynolds, head of sales at London estate agency Antony Roberts, described the mood as “steady and selective”, adding that activity is expected to be quieter over the summer before firming up in the autumn when buyers gain more clarity on interest rates and geopolitical developments.
Mortgage rates have dipped slightly in recent weeks, thanks to oil prices returning to pre-conflict levels, but remain elevated. The average two-year fixed-rate mortgage stood at 5.53% on Tuesday, up from 4.83% at the start of March. The average five-year fixed rate was also 5.53%, compared with 4.95% in early March, according to Moneyfacts.
The slowdown hit housebuilder shares, with Barratt Redrow falling 1.6%, Persimmon down 0.5% and Berkeley down 1.4% in early Wednesday trading. However, Nationwide noted that annual house price growth rose to 2.2% in June, up from 1.7% in May, and all UK regions saw price increases in the second quarter.
Northern Ireland recorded the strongest annual growth at 8.6%, followed by Scotland and Wales at 3.5%, while London prices edged up 1.6%. Robert Gardner, Nationwide's chief economist, suggested that easing oil prices could reduce the need for further interest rate rises, potentially bringing down mortgage costs in the months ahead.
