House Prices Mostly Stabilising
The latest Nationwide House Price Index for June shows that prices
have remained broadly flat over the month but are down 3.5% when
compared with June 2022.
All regions except Northern Ireland recorded annual price falls in the second
quarter of this year. East Anglia was the weakest performing region with prices
down by 4.7% year-on-year. London saw a 4.3% year-on-year decline, while the
surrounding Outer Metropolitan region saw a 2.9% fall. The North West was the
weakest performing northern region, with prices down 4.1% year-on-year.
Southern England (including the South West, Outer South East, Outer
Metropolitan, London, and East Anglia) saw a 3.8% decline overall.
A soft landing?
Robert Gardner, Nationwide’s Chief Economist, commented on the figures “A
relatively soft landing is still possible, providing the broader economy performs
as we (and most other forecasters) expect. Labour market conditions are
expected to remain relatively robust, with the unemployment rate remaining
below 5%, while income growth is projected to remain solid. With Bank Rate
likely to peak in the quarters ahead, longer term interest rates should also start
to fall back. As a result, a combination of healthy rates of income growth and
modest price declines should improve affordability over time, especially if
mortgage rates moderate.”
Bigger discounts
According to Zoopla, more than two-fifths of sellers (42%) are accepting offers
that are more than 5% below the asking price. This is a near-threefold increase
from the 14% who did so in June 2022. Around 15% are accepting even greater
discounts of more than 10% below the asking price.
Better outlook for FTBs?
Falling house prices and the re-introduction of 100% mortgages have given first-
time buyers (FTBs) reasons to be hopeful.
A survey of 1,000 first-time buyers found that 40% were optimistic about
becoming homeowners, this is in line with the previous survey at the start of the
year when 42% said they felt positive.
However, the last few weeks have seen mortgage rates rising quickly towards
6%. Some buyers, cautious about taking on higher rate mortgages, have
stepped back from the market. According to Zoopla, demand has fallen by 18%
in the last two months.
Commenting on the latest figures Richard Donnell, Executive Director at Zoopla
said, “Higher mortgage rates have hit home buyer demand once again after
a sustained improvement over the Spring as mortgage rates fell to 4%.
House prices increased slightly over the last 3 months to June, but higher mortgage
rates and weaker demand mean we expect a return of modest price falls in H2.
Overall, we expect prices to be 5% lower by the end of the year, still 15% higher
than pre-pandemic levels.”
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