• Swindon & Wiltshire Economy
• Monday July 1 2024
• Author Name: Peter Davison

House prices rise again – putting homes further out of reach of average wage earners, warns Nationwide

UK house prices unexpectedly rose in June, according to figures from Swindon-headquartered mortgage lender Nationwide.

But the lender warned that “housing affordability is still stretched” – despite wages rising above the rate of inflation in recent months.

Nationwide said property prices were up 0.2 per cent between May and June, following a 0.4 per cent rise the previous month.

The increase took the average house price to £266,064 – 1.5 per cent higher than in the same month last year, with the annual rate of growth accelerating from 1.3 per cent the previous month.

Nationwide’s chief economist, Robert Gardner, said: “While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic.

“For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25 per cent deposit was 1.3 per cent in late 2021, but in recent months this has been nearer to 4.7 per cent.

“As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equivalent to 37 per cent of take-home pay – well above the long run average of 30 per cent.

Figures also showed that the number of people buying a property with cash was up five per cent, while transactions involving a mortgage are down 25 per cent compared to the pre-pandemic year of 2019.