House prices in South of England fall while North sees growth

The cost of UK property edged upwards overall in June as mortgage rates began to ease

House prices in Southern England declined over the year while properties in the North continued to edge upwards, a new report has found.

The price of UK homes rose in June as mortgage rates began to ease following a sharp surge triggered by the Iran war. The average property price climbed by 0.2 per cent in the month to £299,330, reversing a 0.2 per cent decline recorded in May, according to the Lloyds house price index.

Fears over inflation and expectations of higher interest rates stemming from the Middle East conflict have knocked confidence in the property market in recent months, though lenders have started trimming their mortgage rates over the past few weeks.

Swindon-headquartered building society Nationwide cut its home loan rates on two separate occasions last month, as US-Iran peace talks helped to ease inflationary concerns.

Lloyds noted that softening borrowing costs are helping to nudge house prices back up, with June marking the first monthly price increase in four months, as reported by City AM.

The annual rate of price growth also ticked higher to 0.6 per cent, while a 0.8 per cent rise in prices for first-time buyers pointed to a recovery in demand, Lloyds said.

Amanda Bryden, head of mortgages at Lloyds, said: “While affordability remains stretched for many buyers, mortgage rates have eased from their recent highs, offering some encouragement to those considering a move.”

Although mortgage approval rates fell in May, Lloyds attributed this to the earlier spike in borrowing costs, adding that activity should recover as mortgage rates continue to decline.

“Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor,” Bryden added.

South subdued while North sees growth

Property markets across southern England remained subdued compared with other parts of the country, however.

Average prices dropped by two per cent to £381,654 in the South East and and by 1.3 per cent to £299,532 in the South West.

England’s northern regions once again lifted the national average increase, with prices rising by 2.8 per cent to £181,133 in the North East and by 2.4 per cent to £248,218 in the North West.

Jonathan Hopper, chief executive of Garrington Property Finders, said: “In southern areas a glut of supply is attracting too few serious buyers, and this is steadily driving prices down. Buyers are often able to ask for, and get, reductions on the asking price. Sellers putting their home on the market now must rein in their price expectations or risk seeing it languish unsold.

“In the north the forces of supply and demand are more balanced, and this is helping prices to rise steadily. The north’s rate of growth could accelerate further under a Burnham premiership, and buyer sentiment here is already lifting at the prospect of huge government investment and job creation.”