House prices are rising again, according to Britain’s largest building society, but a North-South divide has emerged as high mortgage rates hit expensive homes in the south.
The typical house price rose by 1.5 per cent or £3,825 in the year to June, according to Nationwide, but homeowners in the south of England are more likely to have seen their property values fall.
The average home in the UK is now worth £266,064 according to the building society, having increased by 0.2 per cent or £1,815 compared to May.
The notable exception to the North-South divide is London, where house prices rose 1.6 percent over the past year.
On the rise: Typical house prices rose 1.5% in the year to June, according to Nationwide
In May, prices grew by an average of 0.4 percent month-on-month and 1.3 percent year-on-year.
Despite the recent rebound, house prices are still around 3 percent below the all-time high recorded in the summer of 2022.
In England, house prices rose most rapidly in the more affordable areas of the North and Midlands, which saw combined growth of 2.4 per cent year-on-year.
However, the more expensive south of England saw a fall of 0.3 per cent.
London was the best-performing southern region, with annual price growth holding at 1.6 percent.
East Anglia was the weakest performing region, with prices falling 1.8 per cent year-on-year.
| Region | Average housing price | Annual increase or decrease |
|---|---|---|
| North Ireland | £190,300 | 4.1% |
| northwest | £213,580 | 4.1% |
| Yorkshire and the Humber | £206,653 | 3.8% |
| North | £158,467 | 2.9% |
| London | £525,248 | 1.6% |
| West Midlands | £242,873 | 1.4% |
| Welsh | £207,650 | 1.4% |
| Scotland | £181,186 | 1.4% |
| East Midlands | £231,745 | -0.2% |
| Outer metropolitan area (includes parts of Buckinghamshire, Hertfordshire and Surrey) | £418,919 | -0.5% |
| Outer South East (includes parts of Bedfordshire, Oxfordshire and East Sussex) | £331,995 | -1.1% |
| South West | £301,139 | -1.5% |
| East Anglia | £270,597 | -1.8% |
| Source: Nationwide | ||
High mortgage rates continue to slow activity in the housing market, according to Nationwide.
The total number of transactions is down about 15 percent compared to 2019, when prices hit a record high, he said, but transactions involving a mortgage have dropped even more, by almost a quarter.
The average five-year fixed mortgage rate for someone buying with a 20 per cent deposit is now 5.09 per cent, up from 2.24 per cent in 2019, according to data from UK Finance.
Breakdown: Southern areas were more likely to see declines, while northern areas saw gains
Growth: House prices have risen the most in the northern regions of England
However, there is hope that rates will move lower as a possible Bank of England base rate cut approaches.
Several major mortgage lenders have reduced rates in the last two weeks.
Robert Gardner, chief economist at Nationwide, said: “While earnings growth has been much stronger than house price growth in recent years, this has not been enough to offset the impact of mortgage rates. higher, which are still well above the historical lows that prevail in 2021 as a result of the pandemic.
‘As a result, housing affordability is still limited. Today, a borrower earning the average UK income and purchasing a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equal to 37 per cent of take-home pay, well above long-term average of 30 percent. .’
Affordability challenge: Typical house prices have risen by around £70,000 since 2014
Higher rates and weak demand led analysts at Capital Economics to reduce their forecast for house price growth in 2024, from 3 percent to 0.5 percent.
Andrew Wishart, senior UK economist, said: “Looking ahead, we think national average house prices will fall again in the third quarter (July to September).
The average mortgage rate remains above 4.5 per cent, which has proven to be a turning point for demand, and the number of homes coming up for sale appears to be increasing.’