According to Nationwide building society, although UK house prices unexpectedly increased between May and June, yearly prices dropped at the quickest rate since 2009 as the market was hit by skyrocketing mortgage payments.
The unexpected monthly increase of 0.1% overturned a 0.1% decline in May and surprised economist predictions of a 0.3% decline. The average price of a home in the UK increased somewhat as a result, reaching $262,239.
House prices decreased 3.5% in June compared to the same month last year, which is substantially unchanged from the 3.4% recorded in May.
According to Robert Gardner, chief economist of Nationwide, "the sudden rise in borrowing costs is likely to exert a significant drag on housing market activity in the near term." Although longer-term borrowing prices have increased to levels akin to those that prevailed after the mini-budget last year, this hasn't yet had the same detrimental effect on sentiment.
Business reactions:
The Guild of Property Professionals' CEO, Iain McKenzie, said: "While property prices are declining year over year, they are now holding stable in the face of more challenging market conditions, which should give buyers and sellers alike some much-needed comfort.
"Homeowners who have suffered a decline in the value of their properties in the first half of this year will be relieved to hear that prices have leveled out.
It's interesting to note that Northern Ireland is outperforming all other UK regions in terms of housing prices, demonstrating both stability and ongoing annual rise.
"This confidence is echoed in what we are witnessing on the ground, with most prospective buyers planning to climb the property ladder in the coming months. Only 7% of those we polled are concerned that rising mortgage rates will make it harder for them to get a loan.
"Affordability is a significant barrier at the moment, and consumers may be reluctant to commit to a mortgage without assurance that they can make the repayments, particularly when the fixed period expires.
"As inflation slowly declines, interest rates should follow suit. This will give people with variable-rate mortgages some relief from recent increases in their monthly payments. When interest rates inevitably decline, there should be a wider variety of competitive mortgage solutions available."
"Annual house price growth, while declining in June, remains broadly stable, and while borrowing costs have increased as they did in the autumn, Nationwide reports that sentiment hasn't been affected in the same way," said Jason Tebb, chief executive officer of the property search website OnTheMarket.
Borrowers are less able to pay inflated prices, even though they may have previously been willing to do so, as a result of recent interest rate increases and the possibility of future increases, as well as the high cost of living.
Given that offers are frequently made below the asking price, sellers must initially set a reasonable price since they stand the best chance of making a quick sale.
Jonathan Hopper, CEO of Garrington Property Finders, stated: "Those who remain are finding that the market is shifting ever further in their favor. Rapidly rising mortgage rates are thinning the number of committed purchasers.
"Price cooling and sellers' increasing willingness to accept bids below asking price from committed, dependable purchasers have made it a buyer's market for some time.
"While the Nationwide data indicates that average prices were essentially stable in June, we are beginning to notice a change in pricing behavior on the front lines.
As the summer slowdown draws near, some realistic sellers are readjusting their goals by lowering prices in advance of the market rather than slashing their asking prices by thousands in response to a low offer.
Double-digit price drops are increasingly frequent in several locations, with the greatest price drops occurring in areas that experienced the frothiest excesses during the boom and those with high Help to Buy ownership rates.
"For many sellers, this will be a tough pill to take, but it's better than being stuck with an unsold home for months before they have to lower the price anyhow.
The number of first-time buyers is declining, and over the summer, transaction values are probably going to decline more quickly than prices.
"The core contingent of buyers are likely to be strategic, cash-rich buyers who are less concerned about rising interest rates; they are drawn to the compelling opportunities to be had and are willing to take a longer-term view, rather than worrying about how prices might change over the next month or two."
James Forrester, MD of Barrows and Forrester, stated: "Buyer activity is building, albeit at a more measured pace. Borrowing costs have increased significantly in recent months, but even though they may have reached levels similar to those that followed last September's chaotic mini budget, the market isn't feeling the same degree of strain."
House Buyer Bureau's Chris Hodgkinson, MD, said: "For those wanting to sell, present market circumstances are a little hit-and-miss. In recent months, buyer demand has fluctuated, and many sellers are similarly hesitant to commit as property prices continue to stutter due to a decline in buyer purchasing power.
"As a result, more time is spent on the market, and those who do find a buyer face lengthier transaction delays and a higher risk that their sale won't go through."
"Higher interest rates are causing an increased level of unpredictability, and the nation's homebuyers don't know whether they're coming or going at this point," said Marc von Grundherr, director of Benham and Reeves. This is seen from the performance of the present housing market, where property values have remained relatively stable month over month.
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