Annual house price growth picked up to 2.2% in June, from 1.7% in May, although prices were broadly flat month-on-month, the latest Nationwide house price index shows.
The data for Q2 indicates that all thirteen regions saw positive annual house price growth, with all but one recording growth in the 0% to 4% range.
Northern Ireland was once again the exception, with price growth continuing to outpace the rest of the UK by a wide margin. At 8.6% the rate of annual price growth was around four times faster than the 2.2% recorded in the UK as a whole.
Scotland and Wales both saw a slight pickup in annual house price growth in Q2 to 3.5%, while England also saw an acceleration, albeit to a modest 1.5%, from 0.9% in Q1.
Average prices in Northern England were up 3.1% year-on-year. The North West remained the top performing region in England – with prices up 3.9% year-on-year.
Average house price growth in Southern England was broadly stable at 0.7%. London remained the strongest southern region, albeit with a modest annual price rise of 1.6%. Meanwhile, the surrounding Outer Metropolitan and Outer South East regions recorded even more modest rises of 0.3% and 0.1% respectively.
Robert Gardner, Nationwide's chief economist, said: “It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates. Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.
“While geopolitical tensions remain high, the signing of a memorandum of understanding between Iran and the US helped push oil prices back towards the levels prevailing before the conflict began.
“If the energy shock continues to subside, the Bank of England may not need to raise interest rates, or at least by less than had previously been anticipated - a view reinforced by the fact that UK inflation has also been lower than expected in recent months.
“In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed rate mortgage pricing.
“If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment."
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, commented: “On the ground, the picture is more nuanced than national headlines suggest.
“There is real caution at the more rate-dependent end of the market, but a good proportion of buyers are equity-rich or cash, and well-priced family homes in the right roads are still drawing competitive interest.
“There is the familiar pre-summer push from families wanting to be settled before the new school year, but the mood is steady and selective rather than booming or stalling. We expect a quieter, price-sensitive summer, with activity firming again in the autumn once buyers have more clarity on rates and the geopolitical noise has died down.”
Nicky Stevenson, managing director at Fine & Country, added: “A healthy boost in annual house price growth is a reassuring sign that the market is stable, even after a more uncertain few weeks for buyers and sellers.
“Prices were broadly flat month on month, so this is not a market racing ahead, but the improvement in the annual rate does suggest underlying demand remains intact. Buyers are still active, but they are making decisions carefully and with a clear eye on affordability.
“The past month has been shaped by a mixed backdrop. Higher energy prices and political uncertainty have tested consumer confidence, while mortgage approvals softened in May. That has inevitably made some households more cautious and explains why monthly price momentum has been more subdued.
“However, there are reasons to be optimistic. Oil prices have eased back from recent highs, inflation has been lower than expected in recent months, and market expectations around interest rates have shifted. If that continues to feed through into more competitive fixed-rate mortgage pricing, it should give buyers more confidence heading into the second half of the year.
“Buyers remain value-led, but improving mortgage expectations and steadier pricing could help unlock more activity over the coming months, provided wider economic uncertainty does not weigh too heavily on sentiment.
“Looking longer term, the recent announcement of a new Help to Buy ISA could help first-time buyers get onto the market, however, it remains to be seen if it is going to be more generous than the existing Lifetime ISA conditions.”
