The UK housing market is proving to be a study in resilience rather than exuberance, according to Anthony Codling, housing analyst at RBC Capital Markets. The average price of a home dipped £540 in June from May but rose almost £6,000 year on year. The average UK home now costs £277,484, a market that is moving sideways more than it is marching forward. The headline number tells one story, but the regional picture tells a more interesting one: Northern Ireland is doing its own thing entirely, running nearly four times hotter than the national average, while much of southern England is essentially flatlining. Mortgage rates remain the stubborn gatekeeper to a more meaningful recovery, with affordability still stretched by historical standards, and the Bank of England’s cautious approach to rate cuts keeping buyers in a holding pattern. The good news is that all 13 regions are now in positive annual growth territory, which is no small feat. The bad news is that for housebuilders hoping for a demand surge to justify a bullish volume outlook, this is a market that remains more tortoise than hare. The stagnation in the Nationwide measure of house prices in June shows that the rise in mortgage rates triggered by the Iran war continues to weigh on the housing market. But if the recent fall back in swap rates, and therefore mortgage rates, is sustained, we expect house price growth to pick up again later this year. We suspect house prices will do little more than flatline over the next few months, or perhaps even fall a bit, as the drag on housing demand from the previous jump in mortgage rates triggered by the Iran war continues to be felt. But house prices will probably start to rise again later this year as mortgage rates continue to fall back. The two-year quoted mortgage rate fell from 5.1% in April to 4.9% in May and the recent decline in the 2-year swap rate suggests it will fall to around 4.5% in June. The risk, though, is that the improvement in prices we expect doesn’t happen in time to meet our forecast that prices will rise by 1.5% in the year to the fourth quarter of 2026. Indeed, May’s slump in mortgage approvals is consistent with the annual growth rate of house prices slowing to just above 1.0% in six months’ time. Either way, the coming falls in mortgage rates make us more confident in our view that big outright falls in nominal house prices are not on the cards. The government’s new energy price cap comes into effect today. There are warnings that millions of households in Great Britain will be pushed into fuel poverty after months of volatility on the global gas markets, as energy bills rise by more than £220 a year, writes our energy correspondent Jillian Ambrose. As the cap on gas and electricity rates rises to the equivalent of £1,862 a year, the number of households forced to spend more than 10% of their income on energy bills will increase to 13.5m from almost 11.3m in April, according to fuel poverty campaigners. Using new calculations, which assume lower energy consumption, the regulator believes the average UK household will spend £1,663 a year from July. The End Fuel Poverty Coalition warned that the steepest summer rise in energy charges in four years would leave almost 5.5m homes facing energy bills of about 20% of their income, up sharply from 4.3m in April this year. The charity calculated the figures based on research by the University of York. The UK government bond yields rise amid fears over US-Iran peace talks In financial markets, yields on UK government bonds are rising after oil prices edged up, on concerns that peace talks between the US and Iran to end the four-month war have stalled. The yield, or interest rate, on 10-year gilts rose as much as 6 basis points to 4.818%. The 30-year gilt also climbed 6bps to 5.539%. Both are at their highest levels since 22 June. Investors see an 85% chance of a quarter-point rate hike from the Bank of England by the end of the year. Brent crude, the global oil benchmark, rose slightly to $73.53 a barrel earlier, and is now trading at $72.77 a barrel, down 0.25% on the day. Shares in some of Britain’s biggest housebuilders are down again for a second day, after analysts at Kepler Cheuvreux downgraded some target prices, and a class action lawsuit against seven companies over alleged price collusion was filed on Tuesday. On the FTSE 100 index, Barratt Redrow has fallen 1.5% while on the FTSE 250, Berkeley Group dropped 1.9%. A call to suspend new EU border system in peak holiday period as planes leave half full Airlines and airports have called for the new EU biometric border check system to be suspended during the peak summer holiday period, warning that some flights are leaving half full and passengers are struggling in queues of up to five hours. In a letter to Ursula von der Leyen, the president of the European Commission, airlines and airports asked for an option to suspend checks under the system over fears the situation will get much worse during the busy summer. The summer will bring a “significant worsening of an already very difficult situation for passengers,” said industry groups ACI Europe, which represents airports, and Airlines 4 Europe and IATA, which represents airlines. The letter said: "Passengers have already been forced to queue for extended periods outside terminal buildings and on exposed aprons because border control facilities cannot process arrivals quickly enough. Airlines face half-empty planes at gate closing time, while passengers are stuck in border control queues." Some planes have had to delay take off while waiting for passengers, while others have had to leave passengers behind. The groups called on the EC to allow airports to “completely suspend” checks “whenever passenger volumes exceed the operational capacity of border control facilities” during July and August. The UK housing market is proving to be a study in resilience rather than exuberance, said Anthony Codling, housing analyst at RBC Capital Markets. The average price of a home dipped £540 in June from May but rose almost £6,000 year on year. The average UK home now costs £277,484, a market that is moving sideways more than it is marching forward. The headline number tells one story, but the regional picture tells a more interesting one: Northern Ireland is doing its own thing entirely, running nearly four times hotter than the national average, while much of southern England is essentially flatlining. Mortgage rates remain the stubborn gatekeeper to a more meaningful recovery, with affordability still stretched by historical standards, and the Bank of England’s cautious approach to rate cuts keeping buyers in a holding pattern. The good news is that all 13 regions are now in positive annual growth territory, which is no small feat. The bad news is that for housebuilders hoping for a demand surge to justify a bullish volume outlook, this is a market that remains more tortoise than hare.
