- UK house prices rose 0.4% month on month in May, factoring in seasonal effects
- Year-on-year house prices are up 1.3%, according to Nationwide
- General election unlikely to impact house prices, says building society
House prices rose between April and May, according to Nationwide’s latest figures.
The building society said wage growth and falling inflation helped to counteract the impact of higher mortgage rates for buyers.
The average UK home rose in value by 0.4 per cent in May, following an 0.4 per cent fall in April, according to Nationwide, taking account of seasonal effects.
Nationwide uses seasonal adjustment to smooth out months that are typically more and less active in the housing market, and without that adjustment the rise would have been 0.9 per cent.
Back on the rise? House prices rose by 0.4% in May, after taking account of seasonal effects. This resulted in a slight pickup in the annual rate of house price growth to 1.3%
In real terms the average house price increased from £261,962 in April to £264,249 in May, and year-on-year, Nationwide said house prices were up by 1.3 per cent.
Robert Gardner, chief economist at Nationwide, said: ‘The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months.
‘Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.
Will house prices rise further?
Yesterday, Zoopla reported the number of homes on the market has reached the highest level in eight years.
The property portal said the average agent has 31 homes for sale, up 20 per cent on this time last year.
In value terms, Zoopla says there is £230 billion worth of housing for sale, which is 25 per cent higher than a year ago.
The average estate agent has 31 homes for sale – the highest level in eight years, Zoopla says
It is thought that the greater choice available to home buyers will prevent house prices from rising higher this year.
Richard Donnell, executive director of research at Zoopla said: ‘The growth in available supply is welcome news, after several years where scarcity of supply limited sales volumes and pushed up house prices.
‘We expect this expansion in supply to keep house price inflation in check over the remainder of 2024.’
Will the election impact the housing market?
The recent announcement that the UK general election will take place on 4 July has had many wondering what sort of impact – if any – this will have on the housing market.
Nationwide says past general elections have not resulted in a significant change in house price trends.
On the whole, it says prevailing trends have been maintained just before, during and after UK general elections.
No election change to house price trends: Nationwide compared house price movements in the six months leading up to each election (t-6 to t-1) and following each vote (t+1 to t+6)
Anthony Codling, head of European housing for investment bank RBC Capital Markets said: House prices nudged up in May confirming that UK house prices are remaining firm in the face of economic uncertainty.
‘It is too early to say if the election will impact house prices, but the Nationwide agrees with our view that general elections do not appear to impact house prices.
‘Life goes on outside the ballet box, and it seems that life in our own homes is more important than life inside 10 Downing Street.’
Many in the property industry predict cuts to the Bank of England’s base rate, when they arrive, will have more of an impact on the housing market than the general election.
Verona Frankish, chief executive of online estate agent Yopa said: ‘Despite a prolonged period of higher interest rates we’re yet to have seen any notable decline in property values and it seems as though the tide has now well and truly turned, as the market starts to build momentum following a resurgence in market activity so far this year.
‘The possibility of a base rate reduction in the coming months will only help to boost current sentiment and we expect the market to march on undeterred by the political noise being generated from the impending election.’
Nationwide’s chief economist says confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation
Nicky Stevenson, managing director at national estate agent group Fine & Country added: ‘Previously hesitant home buyers are feeling more confident to pull the trigger on moving plans as financial strains ease.
‘With inflation moving closer to the Government’s 2 per cent target and potential interest rate cuts this summer, demand may surge further into 2024.
‘This will help to stabilise or even nudge prices upwards amid buyer competition – a positive development for sellers.
‘Lenders are also lowering rates in response to more favourable conditions, making homeownership more attainable, especially for first-time buyers previously deterred by high monthly payments or excessively long mortgage terms.
‘If current trends persist, the UK housing market could experience a steady rebound, with prices rising moderately in popular areas and hot markets.’