- House prices -0.6% vs -0.2% m/m expected
- Prior +0.4%
- House prices +1.7% vs +2.2% y/y expected
- Prior +3.0%
The average price of a dwelling in the UK eased slightly in May to £278,024, as Nationwide records a price drop of 0.6% on the month in May. Housing sentiment was more resilient in April but it seems that the uncertainty from the Middle East conflict is starting to bite now. That said, house prices are still keeping higher compared to the same month a year ago - even if the measure has declined modestly.
Nationwide notes that:
"Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates, some loss of momentum was to be expected. Indeed, consumer confidence has weakened noticeably since the start of the conflict, with GfK’s headline index falling to its lowest level since late-2023 in April, with only a marginal increase in May.
While market interest rates have risen in recent months, the impact on affordability has so far been modest. Indeed, swap rates, which underpin fixed‑rate mortgage pricing, remain well below the highs reached in 2023 and are broadly in line with levels prevailing in 2024, implying only a partial reversal of earlier gains.
This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived."
