UK House Prices Remain Flat In June

(RTTNews) - UK house prices remained flat in June as uncertainty caused by the war in the Middle East and the subsequent rise in fuel prices and market interest rates weighed on the property market, data from Nationwide Housing Society showed Wednesday.

House prices posted a flat growth in June following a fall of 0.6 percent in May. Prices were forecast to rise 0.1 percent.

On a yearly basis, house price growth accelerated to 2.2 percent in June from 1.7 percent in May. However, the rate fell short of the forecast of 2.4 percent increase.

Nationwide Chief Economist Robert Gardner attributed the recent softness in the housing market to geopolitical tensions and the subsequent rise in energy prices and interest rates.

Consumer sentiment and measures of housing confidence weakened and mortgage approvals declined noticeably in May.

Gardner observed that oil prices dropped back towards pre-conflict levels following the signing of the peace deal between the US and Iran.

If the energy shock continues to ease, the Bank of England may not need to raise interest rates, or at least by less than had previously been anticipated, as inflation also came in lower than expected in recent months.

"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 added.

"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, providing that domestic political uncertainty does not adversely impact sentiment," the economist said.