House prices across the UK grew by 2.2% over the past year, reaching an average of £277,484, according to Nationwide, one of the UK's largest mortgage lenders. The price dipped slightly month-to-month, but the overall trend is what counts — and that trend is gradual recovery.

Nationwide's figures come out ahead of official government data, so they offer an early signal of where the property market is heading. Think of it like a weather forecast that arrives before the actual forecast from the Met Office.

A 2.2% rise is much lower than the 10% or more annual growth seen in 2021 and 2022, but it's a meaningful improvement from 2023, when prices barely moved or even fell slightly. Since late 2024, prices have been climbing slowly upward.

The biggest obstacle right now is that people cannot afford to buy. Mortgage interest rates have been falling since August 2024, yet the rates available to new borrowers are still roughly double or triple what they were a couple of years ago. Someone who locked in a cheap mortgage in 2022 is now facing a much higher rate when they need to renew. This makes it harder for people to save up for a deposit or qualify for a loan, so fewer homes are being bought and sold — even though prices are creeping up.

Another part of the picture is that the UK simply is not building enough new homes. The government wants to build 1.5 million new homes over the next five years, but that target has not yet made a real difference on the ground. Councils are slow to approve planning permission, and housing stays scarce in cities and popular commuter areas. When supply is tight, prices do not fall as much as they otherwise might, because there are not enough homes to go around.

Different parts of the country are doing differently. London's property market has slowed compared to cities in the North West, Yorkshire, and the Midlands. That is because remote and hybrid working has let people move away from London to cheaper places. That pattern is now shifting back slightly as offices reopen and city centres become more appealing again.

What happens next depends on a few things: whether interest rates come down faster and feed into cheaper mortgages for buyers; whether banks become willing to lend more freely; or whether wages suddenly grow much faster than house prices. None of those seem likely to happen soon. On the flip side, the shortage of homes means a major price crash is unlikely unless unemployment shoots up suddenly and buyers disappear.

For people in the property business — lenders, builders, investors — the June figures paint a picture of slow, steady upward movement, but nothing dramatic. When you account for inflation, house prices are barely keeping pace with the general rise in living costs. That means it is still hard for first-time buyers to break into the market, because the purchasing power they need has not improved.

The next monthly update will show whether the summer selling season brought any change — or whether affordability keeps the market moving at its current slow pace.