UK house prices increased in June, despite soaring interest rates leading many to predict a crash, but London was the one region to report a decline.
The pace of growth dipped slightly and was well below inflation, according to Land Registry data, but the average house price was still up by 1.7% in nominal terms.
The housing market has proved surprisingly resilient in the face of rising interest rates, which have soared to 5.25% as the Bank of England aims to push down demand to bring inflation back under control.
The rise in rates sent mortgage prices skyrocketing, though they have dipped slightly in recent weeks. According to Moneyfacts, the average two-year fixed residential mortgage rate today is priced at 6.77 per cent, down from 6.79 per cent yesterday and from the peak of 6.86 per cent. The average five-year fix declined to 6.26 per cent.
In London, however, prices were down by 0.6% to £528,000, though this was still much more expensive than any other region with the South East second at £391,000. The average UK house price was £288,000.
Emma Cox, MD of real estate at Shawbrook, said: “A modest increase in house prices sees the market yet again defying expectations in the face of fluctuating rates, and a slowdown in activity.
“"With the property market overall less busy, a reduction in competition from owner occupiers will create a favourable environment for landlords to consider expanding portfolios. With a robust demand in the rental market, landlords might consider diversifying into higher-yield options like Houses in Multiple Occupation (HMOs), which could in turn contribute to an increase in available properties for rent.”
The land registry stats contradict data from leading mortgage lenders Halifax and Nationwide, which reported declines, albeit modest ones, in recent months.
Jonathan Hopper, CEO of Garrington Property Finders, added: “It’s increasingly clear that the property market is going through a correction rather than a crunch.
“While the slowdown in transactions and widespread falls in prices are undeniable, they’re not universal. The average price paid for a home in England rose by 1.9% in the 12 months to June, up from the 1.7% increase seen in the year to May.
“And across the UK, seasonally adjusted prices rose by 0.3% in June, cancelling out the 0.3% fall recorded in May.”
