Iwona Hovenko, real estate analyst at Bloomberg Intelligence, comments on the latest UK house price data from Nationwide.

The 0.2% UK house price decline in July, according to Nationwide, may still represent a resilient outcome, especially against expectations for a 0.5% fall, given the rapid surge in mortgage rates which may have spooked many prospective homebuyers.

Even the annual price drop of 3.8% - although the worst in 14 years - nevertheless remains somewhat modest against house prices still being 21% above their February 2020 level.”

That said, the longer the mortgage rates remain near their current very high level - unseen since at least 2010 - the larger the potential damage inflicted on house prices and transactions going forward.

Even the best-buy rates on the relatively cheaper five-year deals start at about 5.5% vs. sub-4% in early May, with cheapest two-year fixes available at about 6% (vs. just over 4% three months ago).

Such high rates pose a threat to UK housing outlook and our previous expectations for a 5% decline in house prices in 2023.