UK house prices still unaffordable for many people, says Nationwide

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House prices in the UK remain unaffordable for many households despite wages rising above inflation for the typical earner, Nationwide has said. Britain’s largest building society said prices had risen slightly in June amid the impact of higher mortgage costs, with a 0.2% month-on-month increase. On an annual basis house price growth accelerated from 1.3% in May to 1.5% in June, leaving prices about 3% below the record high set in summer 2022. The average price of a UK home was £266,064 in June, Nationwide said. House prices in the UK fell last year as households came under pressure from 14 consecutive interest rate rises from the Bank of England, but they remain at historically high levels relative to earnings. Prices returned to growth earlier this year, but activity has been constrained by persistently higher borrowing costs and prices remaining unaffordable for many households. Robert Gardner, the Nationwide chief economist, said mortgage rates were still well above the record lows of 2021 and that rising costs had outstripped the benefit from stronger levels of average pay growth in recent months. “As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay – well above the long run average of 30%,” he said. Separate figures from the Bank of England revealed a slowdown in housing market activity in May as people borrowed £1.2bn of mortgage debt, down from £2.2bn in April. Net mortgage approvals for house purchases also fell slightly from 60,800 in April to 60,000 in May. Official figures show average annual wage growth in the three months to April was 6%, above the rate of inflation, which fell back to the Bank’s target of 2% in May after reaching a peak of 11% in October 2022, the highest level in four decades. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The figures come as Labour and the Conservatives promise to boost housing affordability in their manifestos for Thursday’s general election, including pledges to build millions of new homes and support households with raising deposits and accessing cheaper mortgages. Since 2010, despite a succession of government pledges, the average age of a first-time buyer in the UK has risen, rents have soared, homelessness has more than doubled and housebuilding targets have been missed.