UK house prices remain out of reach for many, according to Nationwide. | House prices

According to Nationwide, despite the average worker's wages rising above inflation, UK house prices remain unaffordable for many households.

The UK's largest building society said prices rose slightly in June, up 0.2 per cent from the previous month, weighed down by rising mortgage costs.

On an annualized basis, house price growth accelerated from 1.3% in May to 1.5% in June, putting prices about 3% below their record high in summer 2022. The average price of a UK house in June was $266,064, Nationwide said.

House prices in the UK fell last year as the Bank of England's 14th successive rate hike put pressure on households, but they remain historically high relative to incomes. Prices returned to growth early this year, but activity has been constrained by persistently high borrowing costs and prices unaffordable for many households.

Nationwide chief economist Robert Gardner said mortgage rates are still well above 2021's all-time lows and rising costs have outweighed the benefits of higher average wage growth in recent months.

As a result, housing affordability remains stretched. If a borrower on the average UK income were to buy a typical first-time buyer property with a 20% deposit today, their monthly mortgage payment would be 37%, well above the long-term average of 30%, he said.

Separate figures from the Bank of England showed that housing market activity slowed in May, with people repaying 1.2 billion of their mortgage debt, down from 2.2 billion in April. Net mortgage approvals for home purchases also fell slightly to 60,000 in May from 60,800 in April.

Official figures show average annual wage growth was 6% in the three months to April, ahead of the rate of inflation. The inflation rate peaked at 11% in October 2022 before falling to the bank's target of 2% in May. This is the highest level in 40 years.

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Labor and the Conservatives pledged to lower house prices in their manifestos for Thursday's general election, including pledges to build millions of new homes and support households by increasing deposits and making mortgages more affordable.

Despite a series of government promises since 2010, the average age of new homebuyers in England has risen, rents have soared, homelessness has more than doubled and housebuilding targets have not been met.

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