UK house prices grew at the fastest pace in more than six years in June largely due to the low base of comparison, data from the Nationwide Building Society showed on Tuesday.
House prices grew 13.4 percent on a yearly basis in June, the biggest outturn since November, 2004. Economists had forecast prices to climb 13.7 percent after rising 10.9 percent in May.
While the strength is partly due to base effects, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum, Robert Gardner, Nationwide’s chief economist, said.
Month-on-month, house price growth eased to 0.7 percent in June from 1.7 percent in May. Prices in June were almost 5 percent higher than in March.
Despite house prices rising to new all-time highs, mortgage payment is not high by historic standards, largely because mortgage rates remained close to record lows.
Underlying demand is likely to remain solid in the near term as the economy unlocks, Gardner said. Improving consumer confidence, low borrowing cost combined with the lack of supply on the market suggested further upward pressure on prices.
Nevertheless, underlying demand is likely to soften around the turn of the year if unemployment rises as most analysts expect, as government support schemes wind down, added Gardner.
In the second quarter, there were a considerable pick up in overall house price growth. House prices advanced 3.7 percent sequentially and by 10.3 percent from the last year.