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The housing market was flat in June as signs emerge that the UK jobs market may be “softening”, one of Britain’s biggest mortgage lenders has said.
The average price for a house in the UK was £296,665 in June, according to Halifax, compared with £296,782 in May. It comes after a slight drop of 0.3% in May, although the average house price was still about 2.5% higher in June compared with a year earlier.
Amanda Bryden, the head of mortgages at Halifax, said the market was resilient thanks to wage growth and stable interest rates. However, she added that buyers and homeowners still had to dig deep.
“Affordability is still stretched, particularly for those coming to the end of fixed-rate deals,” she said. “The economic backdrop also remains uncertain; while inflation has eased, it’s still above target, and there are signs the job market may be softening.”
The unemployment rate in the UK hit its highest level in four years in the first three months of this year, at 4.5%. That was up 0.2% on the previous quarter, according to official figures.
However, the housing market could be supported by a lower cost of borrowing, with two more interest rate cuts expected this year, Bryden added. With the average rate on new mortgages now at its lowest since 2023, Halifax anticipates “modest” house price growth for the rest of the year.
The number of first-time buyers in the market has also fallen back to its normal level before the changes to stamp duty, Halifax said. Temporary cuts to the tax in England and Northern Ireland expired in April, adding thousands of pounds to the cost of many property transactions.
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Anthony Codling, of the broker RBC Capital Markets, said the end of the stamp duty holiday had followed its “usual playbook: a rush of transactions as the deadline approaches, a short lull, then back to business as usual”.
“In our view stamp duty holidays pull housing transactions forward rather than creating more transactions overall,” he said. “The return of first-time buyers is a positive sign, a key indicator of the health of the housing market and with wages still rising, and mortgage rates expected to fall, the housing market is in good health as we approach the summer holidays.”
Last week, rival lender Nationwide reported that house prices dropped by the most in two years in June. It calculated that the average price of a home dropped by 0.8% to £271,619, after a 0.4% gain in May.
However, analysts at the building society also said it expected activity to “pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive”.
