the average UK house price reached a new record high in June, but there are “preliminary signs of a slowdown”, according to an index.
Prices rose 10.7% in June, from 11.2% in May, the Nationwide Building Society said.
Across the UK, the average house price was £ 271,613 in June, up 0.3% month-on-month.
Robert Gardner, Nationwide’s chief economist, said: “The price of a typical British house has climbed to a new record high of £ 271,613, with average prices rising by more than £ 26,000 over the past year.
“There are preliminary signs of a slowdown, with the number of mortgages approved for home purchases falling back to pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries.
“Nevertheless, the housing market has maintained a surprising amount of momentum given the increasing pressure on households’ high inflation budgets, which has already driven consumer confidence to a record low.
“Part of the resilience is likely to reflect the current strength of the labor market, where the number of vacancies has exceeded the number of unemployed people in recent months.”
The market is expected to slow further as the pressure on household finances increases in the coming quarters
Mr Gardner said that at the same time the stock of houses on the market remained low, which maintained an upward pressure on house prices.
“The market is expected to slow further as the pressure on household finances increases in the coming quarters, with inflation expected to reach double digits by the end of the year.
“In addition, the Bank of England is widely expected to further raise interest rates, which will also have a cooling impact on the market if it flows into mortgage rates.”
Looking across the UK, Mr Gardner said quarterly figures show a slowdown in house price growth in many regions in the three months to June.
“The South West (of England) surpassed Wales as the region with the strongest performance in the second quarter, with house prices rising 14.7% year-on-year, a slight increase from the previous quarter.
“This has now been followed by East Anglia, where annual price growth has remained at 14.2%.
“Wales saw a slowdown in annual price growth to 13.4%, from 15.3% in the first quarter.
“Price growth in Northern Ireland was similar to last quarter at 11.0%. Meanwhile, Scotland saw a 9.5% year-on-year rise in house prices.
“There was a slowdown in annual house price growth in England to 10.7%, from 11.6% in the previous quarter.
“While Suidwes was the region that performed the strongest, southern England in general grew weaker than northern England.
“Within Northern England, the North West was the region that performed the strongest, with price growth rising to 13.3% year-on-year, from 12.4% in the first quarter.
“London remained the worst-performing UK region, with annual price growth slowing to 6.0% from 7.4% in the previous quarter.”
Increased borrowing costs have come at a time when disposable income is already shrinking
Myron Jobson, senior personal finance analyst, interactive investor, said: “Real estate prices have risen faster than wages, causing an affordability squeeze, while mortgage rates have risen to levels we have not seen in a long time.
“These factors, as well as the prospect of higher interest rates to curb runaway inflation, are likely to help curb foaming house prices a bit.”
Nicky Stevenson, managing director of the agent group Fine & Country, said: “Increased borrowing costs have come at a time when disposable income is already shrinking and the UK is approaching a recession.
“This pressure is likely to stretch affordability in the coming months, with inflation still peaking and more aggressive monetary tightening now being indicated by the Bank of England.”
Gabriella Dickens, a senior British economist at Pantheon Macroeconomics, said: “We expect house prices to fall by about 2% in the second half of the year, pushing the year-on-year rate down to about 2% against the end of the year. year. year. ”
Tomer Aboody, director of real estate lender MT Finance, said: “There is still evidence of confidence in the market due to the desire to buy and take advantage of mortgage rates before rising further.”
Jason Tebb, CEO of real estate search site OnTheMarket.com, said: “A subtle rebalancing continues as more stocks hit the market.
“This is due in part to the seasonal effects of summer, traditionally a time when you would expect larger stocks to be available.”
The desperate search for property in a time of sharp rising prices may be over
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The question is whether we will see prices slow to a crawl, stagnate, or start falling when we see a recession.
“An awful lot depends on things we do not yet know – including how high interest rates will go, how deep any recession can be, the impact it could have on jobs, and whether it is serious enough to cause real damage to property. cause. market.”
She added: “The desperate search for property in a time of sharply rising prices may be over.
“Buyers have time to consider whether this is a move they can really afford, and whether they will still be happy they made it if prices pull back later in the year.”
Here are average house prices in the second quarter of 2022, followed by the annual rise in prices, according to the Nationwide Building Society:
– Suidwes, £ 318 325, 14.7%
– East Anglia, £ 289,024, 14.2%
– Wales, £ 208,309, 13.4%
– North West, £ 213,888, 13.3%
– West Midlands, £ 244 167, 11.8%
– Yorkshire and the Humbers, £ 205,714, 11.8%
– East Midlands, £ 234 828, 11.4%
– Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton , Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £ 348 564, 11.1%
– Northern Ireland, £ 181,550, 11.0%
– Noordoos, £ 159 283, 10.6%
– Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne in, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £ 433,558, 10.0%
– Scotland, £ 181 422, 9.5%
– London, £ 540 399, 6.0%