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UK house prices were flat in June from May, but remained down from a year before, according to Nationwide on Friday.
The building society said UK house prices fell 3.5% annually in June, keeping pace with the 3.4% decline seen in May. Market consensus had been expecting a more severe 4.0% fall, according to FXStreet.
From the previous month, house prices were mostly stable. On a seasonally adjusted basis, they rose 0.1% in June from May, after falling 0.1% in May from April.
The average house price in June, which is not seasonally adjusted, was £262,239, rising from £260,736 the month before.
‘Longer-term interest rates, which underpin mortgage pricing, have increased sharply in recent months, in response to data indicating that underlying inflation in the UK economy is not moderating as fast as expected. This has prompted investors to expect the Bank of England to increase its policy rate further and for it to remain higher for longer,’ said Robert Gardner, Nationwide’s chief economist.
Longer-term borrowing costs now have risen back to levels seen in the wake of the disastrous UK government budget last autumn, Gardner noted. However, they have not yet had the same negative impact on sentiment.
‘For example, the number of mortgage applications has not yet declined...and indicators of consumer confidence have continued to improve, though they remain below long run averages,’ he noted.
Nevertheless, the steep rise in borrowing costs is likely to be a ‘significant drag’ on UK housing market activity in the near-term, Gardener predicted.
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