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Annual house price growth accelerated in June, and now stands at over 13 per cent, the Nationwide’s latest House Price Index suggests.
The 13.4 per cent annual rate of increase is the highest level recorded since November 2004. The month on month rate of increase was 0.7 per cent, meaning an average priced house went up by over £2k between May and June.
Strongest price growth was in Northern Ireland, weakest was in Scotland.
While strong house price growth is partly due to ‘base effects’, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum, said Nationwide chief economist Robert Gardner.
‘Indeed, June saw the third consecutive month-on-month rise, after taking account of seasonal effects. Prices in June were almost 5 per cent higher than in March.
‘Regional data for the three months to June indicates that all parts of the UK saw an acceleration in annual house price growth. Northern Ireland and Wales saw the largest gains, at 14 per cent and 13.4 per cent respectively. By contrast Scotland saw the weakest rate of annual growth, at 7.1 per cent closely followed by London at 7.3 per cent’.
Meanwhile mortgage payments are still affordable, said Gardner, but deposits remain a major hurdle for most first time buyers
‘Despite the increase in house prices to new all-time highs, the typical mortgage payment is not high by historic standards compared to take home pay, largely because mortgage rates remain close to all-time lows. In fact, on this measure affordability remains broadly in line with its long run average,.
‘However, house prices are close to a record high relative to average incomes. This is important because it makes it even harder for prospective first time buyers to raise a deposit. For example, a 10 per cent deposit is over 50 per cent of typical first time buyer’s income’.
Underlying demand is likely to remain solid in the near term as the economy unlocks, said Gardner. ‘Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee’.