UK house price growth edges up in June on base effects
UK annual house price growth edged up to 1.3% in June, driven by base effects, as monthly prices slipped slightly, signaling a tepid but resilient market.
UK annual house price growth edged up in June, but the move was largely due to base effects as monthly prices remained flat to slightly negative, according to Nationwide data.
The annual rate rose to 1.3% from 1.2% in May, but the average house price dipped to £277,484 from £278,024. The market remains tepid but resilient despite headwinds from the Middle East conflict, which has pushed up energy prices and market interest rates. For rate traders, the housing data provides a mixed signal: while the annual uptick could be seen as a sign of stability, the flat monthly reading suggests that higher borrowing costs are still weighing on demand. The Bank of England's rate path will be influenced by how the housing market evolves, as it is a key channel for monetary policy transmission. The BoE operates under a dual mandate of price stability and supporting economic growth, and housing is a critical transmission mechanism: higher rates increase mortgage costs, dampening demand and slowing inflation, while lower rates stimulate activity. The yield curve has been inverted for months, reflecting recession fears, and the term premium—the compensation investors demand for holding long-term bonds—has widened amid uncertainty about the economic outlook. The BoE's balance sheet runoff, via quantitative tightening, adds upward pressure on gilt yields, further tightening financial conditions. Swap spreads, which measure the cost of swapping floating for fixed rates, have also widened, indicating stress in the derivatives market. Meanwhile, the ECB's Transmission Protection Instrument (TPI) aims to prevent unwarranted fragmentation in the euro area, but UK-specific risks remain. NowPrice's live rates and charts show how the market is reacting to the latest data.
Looking ahead, traders will focus on upcoming inflation and employment data to gauge whether the BoE will need to adjust rates further. The resilience of the housing market, despite elevated rates, may give the central bank room to hold steady, but any sustained weakness could prompt a more dovish stance. Key levels to watch include the average house price support around £275,000 and resistance near £280,000.