House prices have remained “subdued” for a third month in a row, according to a leading lender, but a recent run of mortgage rate reductions is offering hopes of improvement in the market.
The average house price hit £288,455 in June, Halifax reported, down only 0.2% on the £288,931 recorded in May, as a shortage of properties kept prices high. House price growth on an annual basis remained unchanged at 1.6%.
The latest figures from the mortgage lender – which cover much of the election campaign – mark the third consecutive month that house prices have stayed relatively flat.
Amanda Bryden, the Halifax’s head of mortgages, said house prices had posted a seventh consecutive month of year-on-year growth.“This continued stability in house prices – rising by just 0.4% so far this year – reflects a market that remains subdued, though overall activity has been recovering.
“For now, it’s the shortage of available properties, rather than demand from buyers, that continues to underpin higher prices.”
She said that mortgage affordability remained the biggest challenge for new homebuyers, as well as those coming to the end of deals.
However, the prospect of the Bank of England cutting interest rates in August or September has led to a flurry of mortgage reductions this week, offering some relief to buyers and borrowers and stoking hopes of an improved picture later this year.
Earlier this week, Barclays announced that it would cut a selection of its fixed-rate mortgages by 0.27 percentage points, while Halifax lowered rates by 0.19 points and Santander cut rates by 0.16 points on Thursday.
Leeds Building Society announced that on Monday it would cut its residential mortgage rates by up to 0.15 percentage points.
Mark Harris, the chief executive of the mortgage broker SPF Private Clients, said: “With the big five lenders – Barclays, HSBC, Santander, Halifax and NatWest – reducing their mortgage rates this week, lenders continue to jostle for business as they ramp up the summer sales.”
He added said: “Those lenders who haven’t yet repriced are likely to follow suit, as long as service levels allow, which is welcome news for hard-pressed borrowers.”
Analysis by Rightmove published last month found that monthly mortgage costs for first-time buyers had increased by more than 60% since the 2019 general election. It said the average monthly mortgage payments for a typical first-time buyer was now £1,075 a month, up from £667 in 2019.
Bryden said that she expected mortgage costs to ease gradually through a combination of lower interest rates, rising incomes and more restrained growth in house prices.
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London continues to have the most expensive property in the country, Halifax found, with the average home in the capital costing £536,306, up 0.9% in June on a year earlier.
The south-east of England was the second most expensive area, with the average house price at £385,056, while the north-east was the least expensive, with the average property costing £172,308.
The highest property price growth in the UK was in Northern Ireland, with properties costing £192,457 on average, a 4% increase on an annual basis.
Bryden said: “While in the short-term the housing market is delicately balanced and sensitive to the pace of change to base rate, based on our current expectations property prices are likely to rise modestly through the rest of this year and into 2025.”
Jeremy Leaf, a north London estate agent and a former residential chair of the Royal Institution of Chartered Surveyors, said: “The election definitely added to nervousness in the property market but slower-than-expected falls in mortgage rates weighed more heavily.
“We are hearing in our offices and on the ground that most buyers and sellers put moves on hold so we expect the resilient recovering of activity to remain.”
He added: “Looking forward, the rise in listings means prices will stay stable and the arrival of a new government will add certainty.”
