- In June, house prices rose just 0.2% in a month, and are now up 1.5% in a year.
- House prices are now 3% below the all-time highs reached in summer 2022.
- The average house price is £266,604
Nationwide has released its house price index for June: House price growth broadly stable in June (nationwidehousepriceindex.co.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Buyers swapped packing cases for suitcases, as the summer slowdown hit the property market early this year. House prices were broadly flat, as the pressure of higher prices and mortgage rates persuaded some buyers that now was the time to get on with the rest of their lives, and leave the property search for later in the year.
Buyers are wrestling with higher mortgage rates, as, according to Moneyfacts, the average 2-year fixed rate rose from 5.92% to 5.97% during June. The market has been slowly reassessing its predictions of when the Bank of England will cut interest rates, pushing it further and further through the year. We haven’t seen any sudden moves, but this relentless rise for the past few months has meant average rates have increased from 5.56% at the end of January, which has forced some buyers to reconsider.
This is coupled with house prices slowly closing in on the post-pandemic highs, so buyers are having to stretch themselves even further. For some it’s simply too far. Sales with a mortgage this year are down around 25% since 2019, and that’s always going to take a toll.
At the same time, sellers are still sitting on the market, persuaded to take the plunge at the start of the year, when rates were falling and optimism was on the march, but left high and dry as buyers increasingly got cold feet and decided to wait and see. It means for those who can afford to buy, and can drive a hard bargain, there are some real opportunities around.
Buyers may find their mojo again when we get a rate cut from the Bank of England, not least because it will provide a boost to buyer sentiment. This could come as early as August, although sticky services inflation and higher wages could mean we need to wait until the autumn. Either way, we’re not expecting massive overnight drops in mortgage rates, so the reaction is more likely to be a muted upturn in sentiment than an overwhelming wave of optimism that sweeps up all the properties currently sitting on the market.
The election
The result of the election isn’t likely to be a gamechanger for the market. Both the main parties are pledging to help people onto the property ladder – although in different ways. Both are promising to build more houses. Labour is focusing on building more affordable housing, prioritising first-time buyers, and reforming planning to speed things up. Both parties have pledged a permanent mortgage guarantee scheme, but the Conservatives have gone further. They’ve suggested cutting stamp duty on homes costing up to £425,000 for first-time buyers, introducing a new Help-to-Buy equity loan scheme – offering up to 20% towards the cost of a new-build, and a temporary two-year capital gains tax holiday for landlords who sell to tenants.
Neither of the main parties mentioned the Lifetime ISA in their manifestos. However, it still offers a vital leg-up onto the property ladder. HL estimates that 11% of first-time buyers with a mortgage used a Lifetime ISA to get onto the property ladder in the most recent year we have data for (2022-23).
It can make a huge difference, because the first £4,000 a year you put towards your deposit is boosted by a £1,000 bonus from the government. You need to be aged 18-39 and have at least a year between when you initially open the LISA and when you buy, but if you qualify, you could get money from the government towards your deposit. In 2023, among HL LISA clients, the average bonus was £747 during the year
