British house prices showed a small gain in June from May but the impact of higher borrowing costs is still weighing on the property market, mortgage lender Nationwide said today.
UK house prices rose by 0.2% in monthly terms and were 1.5% higher than in June last year, it said.
Britain’s housing market boomed during the coronavirus pandemic but it has slowed after the Bank of England pushed interest rates to their highest since 2008 last year.
Prices as measured by Nationwide are around 3% lower than their record high touched two years ago.
“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,” Robert Gardner, chief economist at Nationwide, said.
Britain’s opposition Labour Party, which is far ahead in opinion polls in the run-up to Thursday’s election, has promised to relax planning rules in the hope of spurring construction which could make housing more affordable.
Prices in London rose by 1.6% in the April-to-June period compared with the second quarter of 2023, Nationwide said.
A Reuters poll of housing market analysts published on May 29 showed property prices in Britain were expected to rise by 1.8% in 2024 as higher wages made homes more affordable.