The average UK house price rose by 0.2% month on month in June, as high mortgage rates continued to hold back buyer activity, according to a report.
The modest monthly growth leaves the average price of a house in the UK at £266,604, the index by Nationwide showed, up 1.5% versus the same time last year.
Prices rose at a slower rate than in May, when they increased by 0.4% month on month, indicating a slight flattening in growth as the housing market remained subdued.
Robert Gardner, Nationwide’s chief economist, said: “While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic.”
While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic
“For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.
“As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay – well above the long-run average of 30%.
The total number of transactions is down by about 15% compared with 2019, when prices were at a record high, Nationwide said.
Transactions involving a mortgage are down even more, by nearly a quarter, reflecting the impact of higher borrowing costs, Gardner added, while cash deals are about 5% above pre-pandemic levels.
