Consumer confidence and housing sentiment reportedly weak
UK annual house price growth rose to 2.2% in June from 1.7% in May but prices remain “broadly flat” month-on-month, according to Nationwide’s latest house price index (HPI).
The average UK property price (not seasonally adjusted) stands at £277,484, down from £278,024 in May.
Robert Gardner, Nationwide’s chief economist, said: “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. Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.”
All regions across the UK saw annual house price growth, led by Northern Ireland with an 8.6% increase, while the outer South East of England saw the lowest rise at 0.1%.
House prices in both Scotland and Wales grew by 3.5% year-on-year this quarter, while England saw a 1.5% increase.
Gardner added: “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.
“In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.
“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.”
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