House prices in the UK rise the fastest since November
Despite flat property sales, house prices in the UK have risen at the fastest pace since November
House prices rebounded in July as growth accelerated to the fastest pace in eight months – but sales activity in the market remains flat, new figures have showed.
The average price of a UK home rose by 3.3 per cent to a new record £230,280 in the year to July, according to Britain’s biggest mortgage lender Halifax.
A bounce in volatile monthly figures added £3,253, or 1.4 per cent, to the cost of the average home and saw annual house price inflation accelerate from the 1.8 per cent seen in June.
House price inflation has now hit its highest level since last November, despite reports of lacklustre sales and a buyers’ market in many areas.
Halifax managing director Russell Galley said that while the quarterly and annual rates of house price growth had improved, housing activity remained ‘soft’.
Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.
He also said they did not expect the recent hike in interest rates to 0.75 per cent to have a ‘significant’ impact on either mortgage affordability or transaction volumes.
Halifax said UK home sales fell by 3 per cent in June, with the figure for the three months to June unchanged compared to the previous quarter.
Head of Lending for Mortgage Advice Bureau, Brian Murphy, said that despite the rise in Bank Rate announced last week by the Bank of England, many lenders haven’t changed their rates as they had priced in for the increase previously, which is good news for buyers and those remortgaging alike.
He added that as with growth in house prices, an interest rate increase is actually the sign of a robust economy, therefore coupled with today’s news, one might suggest that whilst the market isn’t fizzing away at top speed, it’s ticking over nicely through the summer months.
The Halifax data follows last week’s figures by Nationwide, which showed a more modest 2.5 per cent annual rise and 0.6 per cent monthly rise.
Chief property analyst at estate agent Yopa, Mike Scott said the increase in prices does not reflect an increase in market activity, with both buyer and seller numbers remaining subdued.
He added that the economic fundamentals underpinning the housing market remain strong, with high rates of employment, average wages rising faster than inflation and low interest rates. The Bank of England’s recent base rate increase was already largely priced into mortgage interest rates, and is unlikely to dampen the market significantly.