UK house prices edge up as market remains subdued

House prices are ticking up slowly as political uncertainty continues to cause a slowdown, according to the Nationwide house price index.

The data shows UK annual house price growth picked up to 2.2% in June, rising from 1.7% in May.

House prices across UK regions also saw broadly positive growth.

Market has softened a little

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth picked up to 2.2% in June, from 1.7% in May, although prices were broadly flat in month-on-month terms, after taking account of seasonal effects.

“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.

“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.”

Positive house price growth

The data also points to broadly positive house price growth, with all thirteen UK regions recording annual increases.

All but one saw growth in the 0% to 4% range. Northern Ireland was the exception, where price growth continued to outpace the rest of the UK at 8.6%.

Across Northern England, which includes the North, North West, Yorkshire & The Humber, East Midlands, and West Midlands, average prices rose by 3.1% year on year.

The North West (covering areas such as Cheshire, Lancashire, and Greater Manchester) remained the strongest-performing region in England, with prices up 3.9% annually.

In Southern England (South West, Outer South East, Outer Metropolitan, London, and East Anglia), growth was broadly more subdued at 0.7%. London remained the strongest southern region, with a modest annual rise of 1.6%.

Industry reaction to Nationwide’s house price index

Nathan Emerson, CEO at Propertymark, said: “House price growth demonstrates that there remains a healthy level of demand across many parts of the UK, despite ongoing affordability pressures. However, national house price trends only tell part of the story, with Propertymark member agents continuing to report significant regional variations depending on local supply and buyer demand.

“Sellers should be encouraged by rising values, but realistic pricing remains crucial. Homes that are marketed at the right price continue to generate the strongest interest, whereas overpricing can quickly reduce momentum. A balanced market, supported by greater housing supply, remains the best outcome for both buyers and sellers.”

Marc von Grundherr, director of Benham and Reeves, said: “Flat house prices aren’t enough to suggest the market is losing momentum. Housing has never moved in a straight line and short-term fluctuations are part and parcel of a healthy market. It’s the long-term trends that tell stories, and in this case annual house price growth has edged higher.

“The buyers we’re seeing aren’t being put off by marginal price movements. They’re focused on finding the right home, and with mortgage affordability continuing to improve, the appetite to move remains firmly intact.

“If anything, a modest correction can help keep the market moving by giving buyers greater confidence to commit, rather than signalling the start of a broader downturn.”

Tom Bill, head of UK residential research at Knight Frank, said: “Sideways house prices and falling transaction numbers underline the absence of a seasonal spring bounce.

“However, as greater stability returns to energy markets, we have seen mortgage rates edge lower, which will support demand. Just as one headwind eases, another gathers strength. Rising domestic political uncertainty means we may see another summer of speculation around tax, which would keep a lid firmly on activity.”