United Kingdom: Housing market remains tepid in June
June 28, 2018
According to the Nationwide Building Society (NBS), house prices in the United Kingdom rose 0.5% in June compared to the previous month in seasonally adjusted terms, contrasting May’s 0.2% decline. On an annual basis, house prices rose 2.0% in June, down from 2.4% in May and marking a five-year low. The average house price in June was GDP 215,444 (June 2017: GBP 211,311). June’s tepid result comes against a backdrop of sluggish economic growth and still-pessimistic consumer sentiment.
Going forwards, house prices are likely to continue to increase at a mild rate, underpinned by tight supply. In addition, a gradual recovery in real wages could support demand. Monetary conditions will be another key determinant of the evolution of prices. Although the Bank of England kept rates constant at its June meeting, our panelists continue to expect a tightening of monetary policy this year—with several expecting an August rate hike—which would have a knock-on effect on borrowing costs.
Author: Oliver Reynolds, Economist