Average UK house price growth was flat in June amid continuing Middle East tensions, Nationwide data suggests.
The latest Nationwide House Price Index shows that despite average UK property values rising by 2.2% annually, prices were broadly flat in month-on-month terms, after taking account of seasonal effects.
This put average UK property prices at £277,484.
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, says: “It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates.
WEAKER CONFIDENCE
“Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.
“While geopolitical tensions remain high, the signing of a memorandum of understanding between Iran and the US helped push oil prices back towards the levels prevailing before the conflict began.
“If the energy shock continues to subside, the Bank of England may not need to raise interest rates, or at least by less than had previously been anticipated – a view reinforced by the fact that UK inflation has also been lower than expected in recent months.”
SIGNS OF LIFE
Gardner highlights that a shift in market expectations for the future path of interest rates has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.
He adds: “If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment.”
Commenting on the index, Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “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.”
