The average UK house price saw a modest increase of 0.2% month on month in June, as high mortgage rates continued to dampen buyer activity, according to a report.
The slight monthly growth puts the average price of a UK house at £266,064, as shown by the Nationwide index, marking a 1.5% rise compared to the same period last year. The rate of price increase was slower than in May, when they rose by 0.4% month on month, suggesting a slight slowdown in growth as the housing market remains subdued.
Nationwide's chief economist, Robert Gardner, commented: "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%."
Nationwide reported that the total number of transactions is down by approximately 15% compared with 2019, when prices were at a record high. Gardner further added that transactions involving a mortgage have seen an even greater decrease, by nearly a quarter, reflecting the impact of higher borrowing costs. Meanwhile, cash deals are approximately 5% above pre-pandemic levels.