UK house prices were unchanged in June, according to the latest Nationwide House Price Index, prompting industry experts to warn that affordability pressures, geopolitical uncertainty and buyer caution continue to weigh on market activity. Despite this, commentators across the industry say a highly regional market, easing mortgage rates and strong competition between lenders are helping to keep transactions moving, even as many buyers remain hesitant to commit.
Below, mortgage and property experts share their reactions with us.
“UK house price growth flatlined in June with a 0.0% monthly change, while annual house price growth edged up to 2.2%, according to the latest Nationwide house price index. This has brought the average house price to £277,484.
The data also show that the outer South East saw the weakest growth in the second quarter, with house prices rising by just 0.1%, while Northern Ireland saw another 8.6% jump. London retained its position as the strongest southern region with relatively steady growth, dipping only slightly to 1.6% from 1.7% in the prior quarter.
Market momentum has been significantly dampened in recent months as the situation in the Middle East continued to evolve. The pressure it has placed on energy prices and inflation, combined with the resulting uncertainty around the path of interest rates and broader affordability challenges, has made prospective buyers much more cautious.
While a ceasefire has since emerged, the effects of the conflict won’t disappear overnight. Recent data already points to a cooling market, with property transactions edging lower in May and Bank of England figures showing weaker mortgage borrowing and fewer approvals for house purchases.
“Against this backdrop, many prospective buyers are continuing to delay making any major financial commitments. Confidence remains fragile and, after a lengthy period of fluctuating mortgage rates, households are understandably reluctant to make a move until there is greater certainty over borrowing costs and the wider economic outlook.
While significant falls in mortgage rates are unlikely to materialise for some time yet, competition between lenders could create some opportunities. For buyers and homeowners approaching a remortgage, reviewing options and seeking advice early will help put you in a stronger position as the market continues to adjust.”
Ian Futcher, financial planner at Quilter
“On the ground, the picture is more nuanced than national headlines suggest.
There is real caution at the more rate-dependent end of the market, but a good proportion of buyers are equity-rich or cash, and well-priced family homes in the right roads are still drawing competitive interest.
There is the familiar pre-summer push from families wanting to be settled before the new school year, but the mood is steady and selective rather than booming or stalling.
We expect a quieter, price-sensitive summer, with activity firming again in the autumn once buyers have more clarity on rates and the geopolitical noise has died down.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts
“Flat monthly house prices suggest those needs-based buyers who are transacting are not willing to pay over-the-odds for a property but are taking advantage of it being a buyer’s market and negotiating.
Lenders continue to ease their mortgage rates, and the steadiness from the Bank of England in holding base rate at recent meetings should lead to a welcome period of calm after considerable volatility.
Borrowers are taking nothing for granted as the continued high cost of living strains affordability. Many are taking the sensible approach of securing mortgage rates in advance of when needed for peace of mind. With two- and five-year fixes now available from around 4.2 per cent, the rate outlook is more encouraging for borrowers.”
Mark Harris, chief executive of mortgage broker SPF Private Clients
“There is no doubt worries about the economy and especially mortgage rates and energy prices, partly prompted by the protracted Iran War, have put a dampener on house price rises.
However, sellers are trying to hold firm while buyers in price ranges where there is more stock have the whip hand and are mostly demonstrating that power where they can.
There is an expectation that we may be close to the top of the bottom rather than the bottom of the top and as around four out of five sellers are buyers, the smart set are moving on by concentrating on the difference between the two levels rather than being fixated on achieving a standout figure.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman
“Nationwide’s figures reflect a softening housing market. From a lending perspective, we are seeing valuers cautious on value while buyers are looking for a steal and prepared to negotiate hard on price.
After a strong start to the market this year, we are now seeing the ramifications of an interest rate environment which has become unstable again, and the impact this is having on transactions.
Volatile funding rates are the real issue at the moment; while everything pointed towards a lower interest rate environment at the start of this year, the impact of war in the Middle East has since changed this outlook.
The housing market urgently needs some government stimulus to encourage activity, which will have the knock-on effect of benefiting the wider economy. Talk of the removal of stamp duty has been mooted, but it remains to be seen whether that would happen and if it would make a real difference.”
Gareth Lewis, deputy CEO of specialist lender MT Finance
“Average property values were flat on a monthly basis as focused, price-sensitive buyers negotiate, while sellers realise that they will struggle to sell over-ambitiously priced homes when there is so much stock to choose from in some areas.
Despite the impact of the Middle East conflict on inflation and subsequently interest rates, stalling the expected downwards momentum of base rate this year, the resilience of the housing market is evident.
The Bank of England’s decision to hold interest rates at the past four meetings is having a steadying effect, suggesting a calm, considered approach with no need to panic.
As lenders trim their mortgage rates, buyers worried about affordability will find the situation is easing slightly.”
Jason Tebb, President of OnTheMarket
“The dust is settling, but that doesn’t mean it’s back to business as usual. Nationwide’s data shows that at a national level, prices flatlined between May and June.
The regional data reveals which areas have got back into their stride and which have not.
Northern England, Scotland and Wales all saw their annual pace of growth improve during the last three months. The West Midlands saw the biggest turnaround in fortunes between the first and second quarters of the year, with annual price growth leaping from zero to 3.2%.
The North-South divide continues to grow and could be turbocharged by a Prime Minister Burnham. A huge injection of government spending into the north could create a Burnham bounce that accelerates northern price growth further.
Meanwhile Nationwide’s data offers some modest good news for central London, where the prolonged slide in average prices is over. Nevertheless the capital’s malaise has now spread to outer boroughs and the Southeast commuter belt, where a glut of supply is holding down prices and allowing buyers to be choosy.
As a result, even in highly desirable areas, buyers are often able to demand – and get – significant price reductions; while those who are not convinced that a home is 100% right for them won’t hesitate to walk away.
This is due to three factors – elevated interest rates, buyer caution and buyers’ sense that they have time and choice on their side.
While mortgage interest rates have eased in recent weeks, and there are encouraging signs that they may tick down further in coming months, the extra cost of borrowing is still a barrier for mortgage-dependent buyers.
The abundance of choice and lower purchase prices is finally tempting cautious buyers back to the market, but the road back to normality will be long, and the prospect of major property tax changes under Britain’s latest Prime Minister is a dark cloud for a market still craving clarity and confidence.”
Jonathan Hopper, CEO of Garrington Property Finders
“House price growth demonstrates that there remains a healthy level of demand across many parts of the UK, despite ongoing affordability pressures. However, national house price trends only tell part of the story, with Propertymark member agents continuing to report significant regional variations depending on local supply and buyer demand.
Sellers should be encouraged by rising values, but realistic pricing remains crucial. Homes that are marketed at the right price continue to generate the strongest interest, whereas overpricing can quickly reduce momentum. A balanced market, supported by greater housing supply, remains the best outcome for both buyers and sellers.”
Nathan Emerson, CEO at Propertymark
While June’s figures suggest the housing market has lost some momentum, experts remain cautiously optimistic that improving mortgage competition and greater pricing realism could support activity in the months ahead.
However, much will depend on the path of interest rates, inflation and wider economic confidence as buyers continue to weigh up affordability against opportunity.
