UK house price growth accelerated to 2.2% in June, up from 1.7% in May, according to the latest house price index from Nationwide.
Prices were broadly flat on a monthly basis once seasonal effects were accounted for, with the average UK property now valued at £277,484.
"Annual house price growth picked up to 2.2% in June, from 1.7% in May, although prices were broadly flat in month-on-month terms, after taking account of seasonal effects," said Robert Gardner, Nationwide's chief economist.
"It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates. Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May."
Gardner pointed to signs of stabilisation in the weeks since. "While geopolitical tensions remain high, the signing of a memorandum of understanding between Iran and the US helped push oil prices back towards the levels prevailing before the conflict began," he said.
"If the energy shock continues to subside, the Bank of England may not need to raise interest rates, or at least by less than had previously been anticipated, a view reinforced by the fact that UK inflation has also been lower than expected in recent months."
He added that market interest rates underpinning fixed-rate mortgage pricing have already begun to soften. "In recent weeks, a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing," Gardner said.
"If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, provided that domestic political uncertainty does not adversely impact sentiment."
All regions post house price growth in Q2
Nationwide's regional figures, published quarterly, show all thirteen UK regions recorded positive annual house price growth in the three months to June, with all but one sitting within a 0% to 4% range.
Northern Ireland: £226,699, up 8.6% year-on-year
North West: £231,415, up 3.9%
North: £173,756, up 3.9%
Scotland: £195,928, up 3.5%
Wales: £220,337, up 3.5%
West Midlands: £256,592, up 3.2%
Yorkshire and the Humber: £217,518, up 2.9%
East Midlands: £240,482, up 1.8%
London: £540,903, up 1.6%
South West: £310,429, up 0.7%
East Anglia: £274,375, up 0.3%
Outer Metropolitan: £432,173, up 0.3%
Outer South East: £341,175, up 0.1%
Northern Ireland was once again the standout performer, continuing to outpace the rest of the UK by a wide margin. At 8.6%, its rate of annual growth was around four times faster than the 2.2% recorded across the UK as a whole, echoing the trend seen in the border regions of Ireland.
That persistently strong performance has come at a cost to affordability in the region, in contrast with the UK average, which has generally been improving. The mortgage payment on a typical first-time buyer property in Northern Ireland now equates to 31% of an average earner's take-home pay, up from 24% in the second quarter of 2022, though this remains lower than the UK average of 33%.
The price of a typical Northern Ireland home has also climbed to around 80% of the average UK price, up from 70% in the first quarter of 2024, but still well below the peak of 125% recorded in 2007.
Scotland and Wales both saw annual growth pick up slightly to 3.5%, while England also accelerated, albeit to a more modest 1.5%, up from 0.9% in the first quarter. Average prices in Northern England, comprising the North, North West, Yorkshire and the Humber, East Midlands and West Midlands, rose 3.1% year-on-year, with the North West remaining the strongest performer in England at 3.9%.
Growth across Southern England, covering the South West, Outer South East, Outer Metropolitan, London and East Anglia, was broadly stable at 0.7%. London stayed the strongest of the southern regions with a 1.6% annual rise, while the surrounding Outer Metropolitan and Outer South East areas recorded more modest increases of 0.3% and 0.1% respectively.
By nation, Northern Ireland led with average prices of £226,699, up 8.6% annually, though down 0.2% on the quarter. Scotland's average price stood at £195,928, up 3.5% annually and 1.1% quarterly, while Wales recorded £220,337, up 3.5% annually and 0.9% quarterly. England's average price reached £315,208, up 1.5% annually and 0.3% on the quarter.
Energy efficiency and the buy-to-let premium
Nationwide's research suggests that energy efficiency ratings have only a limited impact on prices for owner-occupied homes in England, despite rising interest in 'going green'.
Analysis that accounted for other characteristics, such as bedroom count, location and whether a property is newly built, found that a property rated A or B attracts a modest premium of 1.6% compared with a similar D-rated home, equivalent to around £4,500 based on the average house price in England. There is little difference for C or E-rated properties compared with D, though the least efficient homes, those rated F or G, sell for around 1.4% less, a discount of roughly £4,000.
The picture looks rather different for landlords. Nationwide found that energy efficiency has a far greater bearing on buy-to-let purchases, where a property rated A or B commands a 12.2% premium, a gap that underscores how far EPC compliance has moved up the agenda for investors weighing acquisitions or refurbishments.
Consumer research carried out by Nationwide found that 78% of homeowners expect buyers to pay more for an energy-efficient home. That view was strongest among younger buyers, with 32% of those aged 25 to 34 expecting buyers to pay significantly more for an energy-efficient property, compared with just 5% of those aged 55 and over. A further 69% of respondents believed EPC ratings matter more now than when they bought their own home.
Despite that, awareness remains patchy. Over half (54%) of those surveyed did not know their current property's energy efficiency rating, yet 77% said EPC rating would be an important factor when choosing a property to buy in future, rising to 49% of 25 to 34-year-olds who described it as 'very important'.
Among homeowners who had made energy efficiency improvements over the past decade, the most popular measures were adding solar panels, improving insulation and upgrading to energy-saving windows and doors. The main motivations cited were reducing energy bills, mentioned by 60% of respondents, and improving comfort, cited by 48%. Nearly three-quarters (73%) said they had seen their energy bills fall as a result.
That aligns with separate data from the Department for Energy Security and Net Zero, which shows median equivalised fuel costs for a property rated A, B or C running around £400 a year lower than for a D-rated home, and £1,200 a year lower than for an E-rated property.
