House prices are climbing again, according to Britain’s biggest building society, but a North-South divide has emerged as high mortgage rates hit pricey southern homes.
The typical house price increased 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 the value of their property fall.
The average UK home is now worth £266,064 according to the building society, having risen 0.2 per cent or £1,815 compared to May.
The notable exception to the North-South divide is London, where house prices climbed 1.6 per cent over the past year.
On the rise: The typical house price rose 1.5% in the year to June, Nationwide said
In May, prices grew on average by 0.4 per cent month-on-month and 1.3 per cent year-on-year.
Desite the recent pick-up, house prices are still around 3 per cent below the all-time high recorded in the summer of 2022.
In England, house prices rose fastest in more affordable areas in the North and the Midlands, which saw combined growth of 2.4 per cent year on year.
However, more expensive southern England saw a 0.3 per cent fall.
London was the best-performing southern region, with annual price growth maintained at 1.6 per cent.
East Anglia was the weakest-performing region, with prices down 1.8 per cent year on year.
| Region | Average house price | Annual rise or fall |
|---|---|---|
| Northern Ireland | £190,300 | 4.1% |
| North West | £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% |
| Wales | £207,650 | 1.4% |
| Scotland | £181,186 | 1.4% |
| East Midlands | £231,745 | -0.2% |
| Outer Metropolitan (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 | ||
Elevated mortgage rates continue to dampen activity in the housing market, according to Nationwide.
The total number of transactions is down by about 15 per cent compared with 2019, when prices were at a record high, it said – but transactions involving a mortgage are down even more, by nearly a quarter.
The average five-year fixed mortgage rate for someone buying with a 20 per cent deposit is now 5.09 per cent, compared to 2.24 per cent in 2019, according to UK Finance data.
Divide: Southern areas were more likely to see falls while Northern ones saw gains
Growth: House prices have gone up by more in the Northern regions of England
However, there is hope that rates may come down as a potential cut to the Bank of England base rate draws closer.
Several major mortgage lenders have reduced rates in the last two weeks.
Robert Gardner, Nationwide’s chief economist, said: ‘While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic.
‘As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equivalent to 37 per cent of take-home pay – well above the long run average of 30 per cent.’
Affordability challenge: Typical house price has risen by around £70,000 since 2014
Higher rates and low demand led analysts at Capital Economics to scale back their forecast for house price growth in 2024, from 3 per cent to 0.5 per cent.
Andrew Wishart, senior UK economist, said: ‘Looking ahead, we think that the national average house price will slip back in Q3 [July to September].
The average mortgage rate is still over 4.5 per cent which has proven a tipping point for demand, and the number of homes being put up for sale appears to be increasing.’