Nationwide Property Index for June released

The Nationwide House Price Index released this morning has revealed that house prices grew by 0.2% month on month in June.

Overall Market Trends:

  • Annual Growth: UK house prices increased by 1.5% compared to June 2023.
  • Monthly Growth: Prices rose by 0.2% from May 2024.
  • Average Price: The average house price in June 2024 was £266,604, up from £264,249 in May 2024.

Regional Performance:

  • Best Performing Region: Northern Ireland, with prices up 4.1% year-on-year in Q2 2024.
  • Weakest Performing Region: East Anglia, with prices down 1.8% over the year.
  • England Overall: Prices increased by 0.6% year-on-year.
  • Wales and Scotland: Both regions saw a 1.4% year-on-year rise.
  • Northern England: Prices up 2.4% year-on-year.
  • Southern England: Prices fell 0.3% year-on-year, with London being the best-performing southern region at 1.6% annual growth.

Market Activity:

  • Subdued Activity: Housing market activity remains low, with total transactions down 15% compared to 2019 levels. Mortgage transactions have decreased nearly 25%, while cash transactions are up 5% above pre-pandemic levels.
  • Affordability Issues: Higher mortgage rates have stretched affordability. Average monthly mortgage payments now account for 37% of take-home pay, up from the long-term average of 30%.

Price Index and Monthly Changes:

  • Monthly Index: Increased to 524.8 in June 2024 from 523.8 in May 2024.
  • Monthly Change (Seasonally Adjusted): +0.2% in June 2024.
  • Annual Change: Rose to 1.5% in June 2024 from 1.3% in May 2024.

Economic Context:

  • Mortgage Rates: The interest rate for a five-year fixed mortgage with a 25% deposit has risen to around 4.7%, compared to 1.3% in late 2021.
  • Earnings vs. Prices: Although earnings growth has been stronger than house price growth, higher mortgage rates have negatively impacted housing affordability.

Historical Comparisons:

  • June 2022: Annual change 10.7%, average price £271,613.
  • June 2023: Annual change -3.5%, average price £262,239.
  • June 2024: Annual change 1.5%, average price £266,604.

Conclusion

The UK housing market showed modest growth in June 2024 with a 1.5% annual increase. Northern Ireland continues to lead in regional performance, while East Anglia struggles with declining prices. Despite the overall price growth, the market remains subdued with lower transaction volumes and stretched affordability due to high mortgage rates

Nationwide chief economist Robert Gardner said prices were around 3% below the all-time high recorded in the summer of 2022.

“Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels,” he said. “Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels.”

Gardner continued: “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%.”

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