UK House Prices Towered A Bit Higher Last Month

UK House Prices Towered A Bit Higher Last Month
Paul Allison, CFA

5 months ago2 mins

What’s going on here?

UK house prices towered a little higher in June, according to data from Nationwide.

What does this mean?

The UK housing market is showing more backbone than folk gave it credit for. After all, the market has managed to hold its ground so far, despite gloomy predictions that skyrocketing mortgage rates would trigger a crash. And sure, there was a 3.5% dip in June compared to last year – but for one, that’s closer to a gentle slide than a catastrophic tumble. And for another, June’s prices still edged past the figures from this May.

Homeowners shouldn’t break out the champagne just yet, though. Lending rates are on the up and up – which could trigger a wave of forced sales, bringing house prices back to earth pretty swiftly.

UK house prices

Why should I care?

For you personally: Generation lottery.

Anyone who managed to hop onto the property ladder in the past decade has been surfing a sweet wave of low rates and booming property prices. And sure, generations before that might have grappled with sky-high borrowing rates, but their house prices were a steal. If you’re part of the younger generation, though, and you feel like you’ve drawn the short straw, hold on. These higher rates could nudge the UK into a recession, and that should lead to cheaper borrowing. In short, then, the best strategy might actually be some old-school Boomer advice: keep on saving and hoping, saving and hoping.

The bigger picture: Supply glut.

By the looks of it, there could be plenty of properties available before long. Data firm UK Finance thinks that about 2.4 million borrowers need to refinance their mortgages before the end of next year. And with current mortgage rates nearly quadrupling since their September 2021 low, borrowers could be facing a steep hike in interest payments when the due date rolls around. Only time will tell how many households overextended themselves – but it looks like the fallout might not be pretty.

UK mortgage rates
Source: Statista


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