Annual house price growth eases in July

House prices in the three months to July were 7.9% higher than in the same three months a year earlier, lower than June's 9.6% and the lowest since December 2014 (7.8%).

Related topics:  Finance News
Rozi Jones
6th August 2015
housing market house down decline drop decrease

House prices in the latest three months (May-July) were 2.4% higher than in the preceding three months (February-April), also easing from 3.3% last month.

On a monthly basis, house prices fell by 0.6% between June and July; the first decline since February 2015 (-0.4%).

However mortgage approvals remain high. The volume of mortgage approvals for house purchases increased by 3% in June. Approvals in the three months to June were 8% higher than in the preceding three months (January-March) and 4% higher than in the same three months last year. 

UK home sales also increased for the second consecutive month, rising by 5% between May and June to 104,590. This was the first time that monthly sales have exceeded 100,000 since September 2014. Sales were 3% higher than in June 2014; the first annual rise this year. 

The stock of homes available for sale fell for the third successive month in June to another new record low. New instructions also dropped in June, marking the tenth decline in the past 11 months, contributing to the very low levels of supply.
 
Stephen Noakes, Managing Director Retail Customer Products, said:

"House prices in the three months to July were 2.4% higher than in the previous quarter. This measure of the underlying rate of house price growth eased following last month’s sharp rise. Annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014.
 
“The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand. Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well-supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near-term.”

Stephen Smith, Director, Legal & General Mortgage Club & Housing, commented:

“Although house price growth has shown a surprise fall this month, we don’t expect this trend to last. Strong market conditions, driven by low inflation and rising wages, along with the MPC’s recent hints of rate rises, are likely to drive more people to the market in the remainder of the year.
 
"Supply is already failing to keep up with demand, and unless more homes are built to alleviate overcrowding in the market, increasing demand is likely to cause house prices to climb at a greater pace compared to recent months. This will make homes unaffordable for many looking to buy, meaning that they will be forced to wait until later in life to follow their dream of homeownership. The country needs to build around 250,000 extra houses per year to bring balance to the market, and make homes more affordable for those seeking to own their own home.”

Rob Weaver, director of Property Partner, added:
 
"It's difficult to have too much faith in house price indices when they conflict on price growth in the same month. Nationwide showed a price rise in July, Halifax are saying that average prices have fallen. This conflicting data shows the volatility of these indices over short periods. The general trend over a more reliable period of three months is steady growth.
 
"What Nationwide and Halifax don't disagree on is the shortage of stock on the market. When the housing stock is there it sells, but where are the sellers? This continued lack of stock points to a housing market that remains short on confidence and still not fully functioning. Halifax reports that confidence is higher than at the beginning of 2015, but the lack of supply implies confidence is not where is need to be. 
  
"In terms of activity, we are likely to see a drop off during these summer months. It will be interesting to see what happens in the Autumn and if supply levels start to pick up. Right now we have reasonably good market conditions, with a healthy economy, wage growth, low interest rates and a cluster of great mortgage deals. But confidence in the market is fragile and easily upset with interest rate rises on the horizon."

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