UK house prices flat in June, says Nationwide; higher energy bills cap kicks in – business live
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Key events
Back to house prices. Jonathan Hopper, chief executive of Garrington Property Finders, said:
The dust is settling but that doesn’t mean it’s back to business as usual. Nationwide’s data shows that at a national level, prices flatlined between May and June.
The regional data reveals which areas have got back into their stride and which have not.
Northern England, Scotland and Wales all saw their annual pace of growth improve during the last three months. The West Midlands saw the biggest turnaround in fortunes between the first and second quarters of the year, with annual price growth leaping from zero to 3.2%.
The North-South divide continues to grow and could be turbocharged by a prime minister Burnham. A huge injection of government spending into the north could create a Burnham bounce that accelerates northern price growth further.
Meanwhile Nationwide’s data offers some modest good news for central London, where the prolonged slide in average prices is over. Nevertheless the capital’s malaise has now spread to outer boroughs and the south-east commuter belt, where a glut of supply is holding down prices and allowing buyers to be choosy.
As a result, even in highly desirable areas buyers are often able to demand – and get – significant price reductions; while those who are not convinced that a home is 100% right for them won’t hesitate to walk away.
This is due to three factors – elevated interest rates, buyer caution and buyers’ sense that they have time and choice on their side.
Turning to mortgage rates, he said:
While mortgage interest rates have eased in recent weeks, and there are encouraging signs that they may tick down further in coming months, the extra cost of borrowing is still a barrier for mortgage-dependent buyers.
The abundance of choice and lower purchase prices is finally tempting cautious buyers back to the market, but the road back to normality will be long and the prospect of major property tax changes under Britain’s latest prime minister is a dark cloud for a market still craving clarity and confidence.
Call to suspend new EU border system in peak holiday period as planes leave half full
Mark Sweney
Airlines and airports have called for the new EU biometric border check system to be suspended during the peak summer holiday period, warning that some flights are leaving half full and passengers are struggling in queues of up to five hours.
In a letter to Ursula von der Leyen, the president of the European Commission, airlines and airports asked for an option to suspend checks under the system over fears the situation will get much worse during the busy summer.
The summer will bring a “significant worsening of an already very difficult situation for passengers,” said industry groups ACI Europe, which represents airports, and Airlines 4 Europe and IATA, which represents airlines. The letter said:
Passengers have already been forced to queue for extended periods outside terminal buildings and on exposed aprons because border control facilities cannot process arrivals quickly enough. Airlines face half-empty planes at gate closing time, while passengers are stuck in border control queues.”
Some planes have had to delay take off while waiting for passengers, while others have had to leave passengers behind.
The groups called on the EC to allow airports to “completely suspend” checks “whenever passenger volumes exceed the operational capacity of border control facilities” during July and August.
“The UK housing market is proving to be a study in resilience rather than exuberance,” said Anthony Codling, housing analyst at RBC Capital Markets. The average price of a home dipped £540 in June from May but rose almost £6,000 year on year.
The average UK home now costs £277,484, a market that is moving sideways more than it is marching forward. The headline number tells one story, but the regional picture tells a more interesting one: Northern Ireland is doing its own thing entirely, running nearly four times hotter than the national average, while much of southern England is essentially flatlining.
Mortgage rates remain the stubborn gatekeeper to a more meaningful recovery, with affordability still stretched by historical standards, and the Bank of England’s cautious approach to rate cuts keeping buyers in a holding pattern.
The good news is that all 13 regions are now in positive annual growth territory, which is no small feat. The bad news is that for housebuilders hoping for a demand surge to justify a bullish volume outlook, this is a market that remains more tortoise than hare.
Introduction:
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
House prices in the UK were flat last month, as the market weakened amid the Iran war which sapped people’s confidence.
The average price of a home was little changed at £277,484 in June, versus £278,024 in May, according to Nationwide Building Society’s monthly survey. The zero change reading, which had been expected by economists, came after May’s 0.6% monthly dip.
Compared with June last year, property values were 2.2% higher, up from 1.7% in May.
Robert Gardner, Nationwide’s chief economist, said:
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. Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.
Nationwide also published regional figures for the second quarter.
House prices rose fastest in Northern Ireland between April and June, although the annual rate slipped to 8.6% from 9.5%, taking the average price to £226,699. The annual pace was 3.9% in north west and northern England, and 3.5% in Scotland and Wales.
In London, prices rose at an annual rate of 1.6%, down from May’s 1.7%, to an average property value of £540,903.
Gardner said the mortgage payment on a typical first-time buyer property in Northern Ireland is now equivalent to 31% of an average earner’s take home pay, up from 24% in the second quarter of 2022 – although this is still lower than the UK average of 33%. Moreover, the price of a typical home in Northern Ireland is now roughly 80% of the average UK price, up from 70% in early 2024, but still well below the peak of 125% recorded in 2007.
Gardner added:
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 – a view reinforced by the fact that UK inflation has also been lower than expected in recent months.
In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.
If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment.
The government’s new energy price cap comes into effect today. There are warnings that millions of households in Great Britain will be pushed into fuel poverty after months of volatility on the global gas markets, as energy bills rise by more than £220 a year, writes our energy correspondent Jillian Ambrose.
As the cap on gas and electricity rates rises to the equivalent of £1,862 a year, the number of households forced to spend more than 10% of their income on energy bills will increase to 13.5m from almost 11.3m in April, according to fuel poverty campaigners.
Using new calculations, which assume lower energy consumption, the regulator believes the average UK household will spend £1,663 a year from July.
The End Fuel Poverty Coalition warned that the steepest summer rise in energy charges in four years would leave almost 5.5m homes facing energy bills of about 20% of their income, up sharply from 4.3m in April this year. The charity calculated the figures based on research by the University of York.
The Agenda
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10am BST: Eurozone inflation for June (flash)
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2pm BST: Bank of England governor Andrew Bailey, ECB president Christine Lagarde and US Federal Reserve chief Kevin Warsh, Bank of Canada governor Tiff Macklem speak at ECB panel in Sintra, Portugal
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3pm BST: US ISM manufacturing PMI for June
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