- Transactions fall to second lowest monthly level since 1995
- Despite annual climb, monthly prices fall for first time in 7 months
- Regional disparity widens as prices in 10 London boroughs reach record highs
In June, the average price paid for a house in England & Wales fell by a very modest 0.1%. This is the first time that the rate has been negative in the last seven months, and the second time that prices have fallen in the last twelve months. However, despite the June fall, the overall trend in the average house price continues to be that of a gentle increase, with only minor oscillations. Hence, we see the minor drop this month as merely a return to trend, rather than an early warning of a more deep-seated malaise in the current housing market.
Richard Sexton, director of e.surv comments:
"Despite the recession and the ongoing financial crisis abroad, house prices have seen a period of steady annual inflation. While house prices dipped on a monthly basis in June, it marks the first fall in seven months, with a shortage of housing supply, alongside underlying confidence from buyers with large enough deposits, generally helping to support prices.
"Mortgage lending remains constrained and the top tier of the housing market remains the key driving force behind annual price rises. Wealthy investors seeking to protect their financial assets are still pouring capital into high-end properties. Their contribution has been all the more stark in comparison to last June, when such activity dropped following the April rush from those eager to purchase before the introduction of higher stamp duty tax on properties worth £1 million or more.
"This vibrancy at the upper echelons of the market has served to de-couple London from the rest of England and Wales, with prices in ten boroughs of the capital now reaching record highs, and the average London house price outstripping the national average by more than £185,000.
"Despite the annual improvement in house prices, transactions hit a near record low in June, with an estimated 57,000 taking place. This wasn’t, however, a sudden deterioration in the health of the housing market but, rather, a combination of record rainfall and the Queen’s Jubilee which conspired to disrupt buyer activity and prices in the short-term.
"Nevertheless, the long-term overriding factor hampering buyer activity remains the lack of mortgage finance available to those without substantial deposits and it is this that will dictate the future direction of the housing market. There is still underlying demand from buyers eager to take advantage of historically affordable mortgage rates and, if the Bank of England’s funding for lending scheme proves to be a success, we may see a change of pace from lenders, allowing a greater number of would-be buyers to make their first purchase."
