UK house prices rebound after a brief decline

British house prices rose in May after declining in the previous two months, as the property market demonstrated resilience despite high borrowing costs, according to data from mortgage lender Nationwide released on Friday. The figures showed a 0.4% increase in prices from April.

Economists surveyed by Reuters had generally anticipated a smaller 0.1% monthly rise. Compared to May last year, prices were 1.3% higher, exceeding the median forecast of a 0.8% increase in the Reuters poll.

“The market seems to be showing signs of resilience despite ongoing affordability pressures due to the rise in longer-term interest rates in recent months,” said Robert Gardner, chief economist at Nationwide. “Consumer confidence has improved significantly over the last few months, supported by solid wage gains and lower inflation.”

Britain’s housing market had slowed in 2023 as the Bank of England raised interest rates to their highest levels since 2008. However, expectations of lower borrowing costs have recently helped to reduce mortgage rates and rejuvenate the market.

A Reuters poll of housing market analysts published on Thursday indicated that property prices in Britain are expected to increase by 1.8% in 2024, as faster wage growth makes homes more affordable. Nationwide also noted that the upcoming national election on July 4 is unlikely to significantly impact the market in the short term, with broader economic trends typically having a greater influence than immediate election-related effects.

Source: Reuters