House Prices Reach Another High but Signs Point to Cool Down
The housing market has reached another high. Yes, another record breaking high during pandemic recovery and the highest inflation rate in many decades. Home buyers were not deterred by higher interest rates, or they could have been motivated to buy before they rise higher. According to Nationwide, the average UK house price reached a new record high of £271,613.
The June house price was a 10.7% annual increase, which was lower than the 11.2% recorded in May. The increase in the house price for the month of June was 0.3%, which was again lower than the monthly gain of 0.9% recorded in May.
The June increase marked the 11th consecutive monthly increase reported by Nationwide. Average prices had increased by more than £26,000 in the past year according to Robert Gardner, Chief Economist at Nationwide.
Mr. Gardner remarked, “There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries.
“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low. Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months.”
Mr. Gardner also remarked that the low supply of homes on the market is causing sustained increase in house prices.
He added, “The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year.
“Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”
Many experts are forecasting a slow down during the last half of the year, and further slowing throughout next year.