UK house prices stagnate in June despite easing mortgage costs

UK house prices remained flat for a second month in June despite easing mortgage costs, Nationwide Building Society data showed Wednesday.

The average UK property price was unchanged at £277,484 ($367,282) in June, following a 0.6% decline in May. The reading came in slightly below economists’ expectations for a 0.1% monthly increase.

The latest figures point to a loss of momentum in the housing market after a stronger start to the year, as higher borrowing costs continued to weigh on affordability.

Mortgage rates rose after the US and Israel launched their war against Iran, as investors priced in a greater risk that the Bank of England would need to raise interest rates to contain inflationary pressures.

Although borrowing costs for homebuyers have eased from April highs, they remain above pre-war levels.

Mortgage costs may decline further in the coming months if market expectations for additional Bank of England tightening continue to fade.

Markets are currently pricing in less than a quarter-point rate increase by year-end, while many economists expect the central bank to avoid further rate hikes if inflation risks continue to ease and the US-Iran truce holds.