Activity Slows due to strong headwinds
House prices remained flat at -0.0% in June, according to Nationwide.
This meant annual growth to June was 2.2%, up from 1.7% in May. Continued uncertainty over the long-term resolution of the US-Iran conflict has resulted in fragile buyer confidence. Meaningful price growth over the short to medium term therefore remains unlikely.
Mortgage approvals for new house purchases in May reached their lowest level since November 2023. Higher mortgage rates have fed through into a reduction in the number of mortgage approvals for house purchases (-15%) and remortgaging (-35%) in May. Completed transactions, which typically lag mortgage approvals by 1-2 months, will likely see a drop off over the coming months.
Sales agreed net of fall throughs were -13% below the 2017-19 average for June, according to Twenty CI.
Lower levels of buyer demand over recent months have seen higher levels of unsold stock. Additionally, Twenty CI reported that price changes for listed stock were up 28% compared with the 2017/19 average, as vendors try to align with buyers’ expectations. Zoopla reported that withdrawals of homes previously listed for sale were 10% above the 2017-19 average. These indicators point to an imbalance in which a large number of sellers are competing for a limited pool of buyers, limiting the potential for price growth over the summer.
Mortgage rates have fallen from a recent peak in April but remain higher than where they were at the start of 2026.
After rising sharply through March and April to 5% for a two-year fix (according to Nationwide), mortgage rates have fallen back to 4.6% as of 1st July, although rates remain higher than they were at the start of 2026. This fall has been driven by lower-than-expected inflation and falling oil prices. However, uncertainty remains and already cautious lenders could raise rates again in response to further escalation in the conflict. It remains to be seen what the long-term outlook will be, but a more lasting ceasefire will give the market greater certainty which will enable a more significant reduction in rates.
More localised house price data from March shows that Scotland and the North West had the greatest price growth, particularly East Dunbartonshire (11.6%), East Ayrshire (10.6%) and East Renfrewshire (8.6%). The weakest growth was in Torbay (-7.3%), Westminster (-6.8%) and Hastings (-6.7%).