House prices grew by 0.2% in June, taking annual growth to 1.5%, according to Nationwide. Markets in more affordable northern areas showed stronger performance, with the highest annual value growth in the North West (4.1%) and in Yorkshire and Humberside (3.7%). The weakest performance was in the more affordability stretched south of the country, with falls in the East of England (-1.8%) and the South East (-1.1%). London bucked the trend of the wider south however, with values up annually (1.6%).

Modest value growth came alongside a rise in completed transactions, as the flurry of sales agreed at the start of 2024 filtered through the system. Completions rose to 95% of their 2017-19 average in May, according to HMRC, the highest it’s been since March 2023.

More recent leading indicators suggest activity has weakened. Mortgage approvals fell marginally, down to 92% of their 2017-19 average in May according to the Bank of England. The number of sales agreed also took a dip,  falling back to 94% of their 2017-19 average in June according to TwentyCi. This weakening in activity is likely a consequence of a slight rise in mortgage rates in recent months.  

The dip in activity is matched by a waning of demand, although supply continued to increase. A small majority of surveyors reported decreasing demand, according to the May RICS survey. In contrast, most surveyors reported increasing supply, maintaining a gap between supply and demand. This will limit value growth in the short term as more stock comes to a market with fewer buyers.

Greater demand will be unlocked by a drop in mortgage rates, with all eyes on the Bank of England and an anticipated base rate cut which Oxford Economics expect in August. Inflation fell to its target of 2% in May – a key step on the path to the rate cut. These key economic indicators are expected to have a more substantive effect on the mainstream market than the Election and its outcome.

The majority of local areas continued to see annual house price falls in the more lagged Land Registry data. Resilient local markets which have seen the highest annual growth include Glasgow (4.7%), Hartlepool (4.6%), and Neath Port Talbot (4.4%). These are more affordable areas that have been less affected by the high cost of debt, and had more capacity for value growth.

Annual rental growth across the UK in May was 5.8% according to Zoopla, down from 6.6% in April. The North East remained the region with the strongest annual growth (9.4%), followed by Scotland (8.2%). Commuter belt locations continue to outperform their wider regions, especially in northern regions, with strong annual growth in Rochdale (14.4%), Oadby and Wigston (12.4%), and West Lancashire (12.3%). Ryedale was the only area with annual falls of -0.8%.