The average price of a UK house grew by 0.1 per cent to £216,515 in June, up from £214,946 in May. The monthly price rise was an improvement on May’s decline of 0.2 per cent.
However, over a 12-month rolling period, price growth of 0.5 per cent to end-June was lower than 0.6 per cent to end-May.
Industry responses were mixed about whether the data pointed to an underlying positive trend for the UK housing market. Sentiment was more uniformly upbeat about London.
“This growth, albeit marginal, demonstrates the resilience of the UK property market and reflects underlying favourable economic factors such as low unemployment and low interest rates. It’s remarkable, given the heightened political uncertainty in the UK surrounding Brexit, that we are still seeing growth in house prices at all,” said Sam Mitchell, chief executive of online estate agent Housesimple.
Lucy Pendleton, founder director of independent estate agents James Pendleton, disagreed.
“It’s no coincidence that this is the seventh consecutive month of annual growth below 1 per cent. Growth has been slowing steadily ever since the Brexit vote of June 2016 because political upset has trimmed people’s risk appetites,” she said.
“The Bank of England has predicted Q2 economic growth to be zero and, for all the talk of a healthy labour market and low borrowing costs, weak growth in the property market still mirrors that overall. The broad brush stroke of the UK property market seems to be slipping inexorably towards zero growth,” Pendleton said.
Nationwide’s chief economist Robert Gardner explained that the data appeared to be “mirroring developments in the broader economy. While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”
“Survey data suggests that new buyer enquiries and consumer confidence has remained subdued in recent months. Nevertheless, indicators of housing marketing activity such as the number of mortgages approved for house purchase, have remained broadly stable,” Gardner added.
A regional view
Nationwide’s data indicated that Northern Ireland continued to be the strongest performing region in Q2. Annual price growth was 5.2 per cent in Northern Ireland, up from 3.3. per cent in Q1. Scotland’s Q2 growth was 0.4 per cent.
England was the weakest performer, with prices flat. The Outer Metro region recorded a 1.8 per cent price decline in Q2 and prices in the Outer South East region fell by 1.6 per cent.
In London, house price falls continued for the eight quarter in a row, but the pace of decline slowed to 0.7 per cent in Q2, against 3.8 per cent in Q1. London prices stand at 5 per cent below their all-time high of Q1 2017.
However, London prices stand at 50 per cent above their 2007 level, compared to 17 per cent for the UK as a whole.
“London has stabilised dramatically with a remarkable bounce back from pretty dire quarterly growth figures earlier in the year,” said Pendleton.
“The capital’s buyers shot back into the swing of things as soon as Britain’s first Brexit goalposts came and went in March, without incident. The capital remains a very special case because there is so much pent up demand. London buyers are highly sensitive to price falls,” she added.
“The London property market is very interesting because people have been down on the capital for some time, talking about falling prices. They haven’t fallen by much and are, astonishingly, only 5 per cent off the 2017 high. It shows that people in the capital are still buying but that there are fewer of them, which affects prices. Many people don’t have to sell and that is reflected in the figures,” said Tomer Aboody, director of property lender MT Finance
“Importantly, the figures indicate that the North-South divide is becoming starker. While London and the South East are hit by political uncertainty and a punitive stamp duty regime for second home ownership, Northern regions experience consistent growth. At Housesimple, we’re seeing that in the North, where affordability is reasonable, the market continues to perform well, with plenty of active buyers and sellers,” Mitchell added.