House prices reassuringly robust in June

The Nationwide released its house price index for June today

What the Nationwide said

Average house prices in June 2023 were £262,239

Average house prices increased by 0.1% in June 2023,

Average house prices have fallen by 3.5% or £9,374 since over the last year. 

Twindig take

UK house prices continue are proving to be incredibly firm against the backdrop of the cost of living crisis and rising mortgage rates. 

Many would have expected larger falls in house prices by now, as Bank Rate hit its highest level since September 2008 in June this year. 

Our own view is that the impact of rising mortgage rates will be seen more in a reduction in the level of housing transactions themselves rather than house prices themselves. We appreciate that rising mortgage rates make homes less affordable, and increase the level of deposit required to buy a home, but in our view, this is not a new problem.  Deposits were a barrier to entry before mortgage rates started to rise, the recent increases have just heightened an existing barrier.

Those coming off fixed-rate deals will also have been stress tested when they secured their mortgage, so whilst the increase will be unpalatable it is unlikely to be impossible to pay. 

In addition, as widely reported, the Government is keen for lenders to support existing homeowners who find themselves with a re-mortgage shock and we suspect that a veiled threat of windfall taxes will help lenders do the right thing.

We, therefore, do not expect to see high levels of repossessions leading to house price falls.

We continue to believe that house prices will fall by around 10% this year.