House prices edged down slightly in June but remain almost £6,000 higher than this time last year, according to Nationwide Building Society, as mortgage approvals slump and uncertainty surrounding the Middle East conflict and UK political turmoil continues to weigh on buyer confidence.
The typical home fell by £540 compared to May to reach £277,484, though on an annual basis prices are up 2.2 per cent, a rise from 1.7 per cent recorded in May. Nationwide, Britain’s biggest building society, said prices were essentially flat on a monthly basis once seasonal adjustments were applied.
Anthony Codling of RBC Capital Markets described the overall picture as a market drifting rather than advancing. “It’s a market moving sideways more than it is marching forward,” he said. “The headline number tells one story, but the regional picture tells a more interesting one: Northern Ireland is doing its own thing entirely, running nearly four times hotter than the national average, while much of southern England is essentially flatlining.”
The subdued figures reflect a sharp deterioration in market activity. Mortgage approvals for house purchases plunged 14.9 per cent to 56,205 in May compared to the previous month, according to Bank of England data. Meanwhile, three in five homes listed for sale since January have yet to find a buyer, with flats the worst affected, according to Zoopla.
Nationwide chief economist Robert Gardner pointed to the impact of external shocks on market sentiment. “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,” he said. “Consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.”
The conflict with Iran has been a key factor behind a spike in mortgage rates that has dented confidence across much of the property market, alongside continued political turbulence in the UK following Sir Keir Starmer’s resignation as Prime Minister.
Buying agent Jonathan Hopper of Garrington Property Finders described conditions as broadly favouring buyers across much of the country. “Even in highly desirable areas buyers are often able to demand — and get — significant price reductions,” he said, “while those who are not convinced that a home is 100 per cent right for them won’t hesitate to walk away.” He attributed this to a combination of higher interest rates, buyer caution and a sense among purchasers that they have both time and choice in their favour.
Hopper struck a cautious note on the outlook, warning that while mortgage rates had eased slightly in recent weeks, borrowing costs remained a barrier for many. “The abundance of choice and lower purchase prices is finally tempting cautious buyers back to the market, but the road back to normality will be long and the prospect of major property tax changes under Britain’s latest Prime Minister is a dark cloud for a market still craving clarity and confidence,” he said, according to This is Money.
