House prices remained flat at £277,484 in June as the housing market softened, despite annual house price growth edging higher to 2.2% from 1.7% in May, according to Nationwide Building Society.

Robert Gardner (main picture), its Chief Economist, says: “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.”

He adds that consumer confidence and housing sentiment had weakened, while mortgage approvals fell noticeably in May.

Recent developments, however, offered grounds for cautious optimism.

If the energy shock continues to subside, the Bank of England may not need to raise interest rates.”

Gardner says: “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.”

Gardner points out that recent changes in market expectations have already helped lower the market interest rates that underpin fixed-rate mortgage pricing.

This, he says, could help restore household confidence and support a recovery in housing market activity in the coming quarters.

Nationwide‘s regional figures reveal a mixed picture across the UK, with Northern Ireland recording the strongest annual growth at 8.6%, but the Outer South East saw the weakest growth at just 0.1%.

Industry reaction

Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “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.”

Verona Frankish, CEO of Yopa, says: “Prices remaining essentially unmoved on the month is definitely not a sign that buyer demand has dropped off. The market remains active and realistically priced homes are continuing to attract plenty of interest.

“A little more breathing space on pricing could even encourage more buyers to take the plunge, helping to keep transactions moving over the months ahead. And the annual increase also shows that over the long-term, the market is still in a good position.”

Tom Bill, Head of UK Residential Research at Knight Frank, says: “Sideways house prices and falling transaction numbers underline the absence of a seasonal spring bounce. However, as greater stability returns to energy markets, we have seen mortgage rates edge lower, which will support demand.

“Just as one headwind eases, another gathers strength. Rising domestic political uncertainty means we may see another summer of speculation around tax, which would keep a lid firmly on activity.”

Marc von Grundherr, Director of Benham and Reeves, says: “Flat house prices aren’t enough to suggest the market is losing momentum. Housing has never moved in a straight line, and short-term fluctuations are part and parcel of a healthy market. It’s the long-term trends that tell stories, and in this case annual house price growth has edged higher.

“The buyers we’re seeing aren’t being put off by marginal price movements. They’re focused on finding the right home, and with mortgage affordability continuing to improve, the appetite to move remains firmly intact.

“If anything, a modest correction can help keep the market moving by giving buyers greater confidence to commit, rather than signalling the start of a broader downturn.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “The latest Nationwide HPI data highlights the resilience of the UK housing market, with annual house price growth picking up to 2.2% in June from 1.7% in May, despite prices remaining broadly flat on a month-on-month basis once seasonal factors are taken into account.

“While the market continues to navigate a mix of economic and political uncertainty, there are signs that conditions are gradually improving. Inflation remains above the Bank of England’s 2% target, but the decision to hold the Bank Rate steady has provided mortgage lenders with greater confidence to reduce rates and compete for borrowers. We are already seeing a number of lenders cutting mortgage deals, which will help improve affordability, increase borrowing power and give some buyers renewed confidence.

“Although transaction levels dipped by 2% month-on-month in May, the market remains active and resilient. The 98,450 transactions recorded were still 17% higher than the same period last year, demonstrating that demand has not disappeared; it is simply becoming more considered. Many buyers and sellers are taking a measured approach while they assess wider economic conditions, but those with a genuine need to move continue to progress with their plans.

“One of the biggest influences on today’s market is the increased choice available to buyers. In the current market, purchasers have more options and greater negotiating power. This makes accurate, evidence-led pricing more important than ever for sellers looking to attract serious buyers and achieve successful outcomes.

“Overall, the market remains one of adjustment rather than decline. As mortgage rates continue to evolve and affordability pressures ease, we expect activity to gradually strengthen, supported by the underlying demand from people who need to move.”

Jason Tebb, President of OnTheMarket, says: “Average property values were flat on a monthly basis as focused, price-sensitive buyers negotiate, while sellers realise that they will struggle to sell over-ambitiously priced homes when there is so much stock to choose from in some areas.

“Despite the impact of the Middle East conflict on inflation and subsequently interest rates, stalling the expected downwards momentum of the base rate this year, the resilience of the housing market is evident.

“The Bank of England’s decision to hold interest rates at the past four meetings is having a steadying effect, suggesting a calm, considered approach with no need to panic.

“As lenders trim their mortgage rates, buyers worried about affordability will find the situation is easing slightly.”

Chris Hodgkinson, Managing Director of House Buyer Bureau, says: “Sellers don’t need to panic, but flat values do make realistic pricing and certainty more important than ever. In any market, buyers remain active for homes that represent good value, while overpriced properties are often the ones left sitting unsold.

“For sellers who need to move quickly, speed and security can be worth far more than holding out in the hope of squeezing out a marginally higher offer. In today’s market, a guaranteed sale is often the biggest advantage of all.”

Mark Harris, Chief Executive of SPF Private Clients, says: “Flat monthly house prices suggest those needs-based buyers who are transacting are not willing to pay over-the-odds for a property but are taking advantage of it being a buyer’s market and negotiating.

“Lenders continue to ease their mortgage rates, and the steadiness from the Bank of England in holding the base rate at recent meetings should lead to a welcome period of calm after considerable volatility.

“Borrowers are taking nothing for granted as the continued high cost of living strains affordability. Many are taking the sensible approach of securing mortgage rates in advance of when needed for peace of mind. With two- and five-year fixes now available from around 4.2 per cent, the rate outlook is more encouraging for borrowers.”