UK house prices remained flat for the second month in a row in June, as estate agents cautioned that the housing market could be heading for a summer slump. The average property price stood at £288,000, unchanged from May, according to data from the mortgage lender Halifax.
Stagnation Amid Economic Headwinds
The lack of growth follows a 0.1% decline in May, marking the first back-to-back period of stagnation since the autumn of 2023. Halifax attributed the slowdown to stretched affordability and lingering uncertainty over the economic outlook. “While the market has shown resilience over the past year, the latest figures suggest a cooling trend that could persist through the summer months,” said Amanda Bryden, head of mortgages at Halifax.
Property professionals have reported a drop in buyer inquiries, with many potential purchasers delaying decisions until after the summer holidays or the next Bank of England interest rate decision. The Royal Institution of Chartered Surveyors (RICS) noted that new buyer enquiries fell for the third consecutive month in June, while agreed sales also declined.
Regional Variations
The stagnation was not uniform across the UK. Northern Ireland and Scotland saw modest price increases of 0.3% and 0.2% respectively, while London prices dipped by 0.1%. The south-east of England experienced the biggest monthly fall, with prices dropping 0.4%. Wales and the West Midlands also recorded declines.
Year-on-year, house prices were up 1.5% in June, slowing from 1.6% in May. This annual growth rate is the weakest since January, reflecting the broader slowdown. The average price of £288,000 remains about £5,000 below the peak reached in August 2023.
Impact of Interest Rates and Inflation
The Bank of England’s decision to hold interest rates at 5.25% has kept mortgage costs high, dampening demand. Although inflation has fallen to 2%, the central bank has signalled that it needs more evidence of sustained easing before cutting rates. Markets expect the first rate cut in August or September, but uncertainty remains.
“The summer months are traditionally slower for the housing market, but this year, the combination of high borrowing costs and economic jitters is making it particularly challenging,” said Tom Bill, head of UK residential research at Knight Frank. “We may see a pick-up in activity later in the year if rates come down, but for now, the market is treading water.”
Outlook for the Market
Estate agents are bracing for a subdued summer, with many predicting that prices will remain flat or edge lower in the coming months. However, some analysts believe that the underlying demand for housing remains strong, supported by a resilient labour market and a shortage of supply.
“The market is caught between two forces: on one hand, high mortgage rates are squeezing buyers; on the other, the lack of available properties is propping up prices,” said Sarah Coles, head of personal finance at Hargreaves Lansdown. “Until we see a clear direction on interest rates, the market is likely to stay in a holding pattern.”
The next Halifax house price index, due in August, will be closely watched for signs of whether the stagnation deepens into a full-blown decline or if the market stabilises.
