House prices climbed by 0.3% between June and July of this year, up from 0.2% the previous month, latest data from the Nationwide House Price Index reveals.
House prices were also up 2,1% year on year, with the annual rate of growth accelerating from 1.5% the previous month. This marks the fastest pace of house price growth since December 2022.
Robert Gardner, NationwideRobert Gardner, Nationwide’s Chief Economist, says: “UK house prices increased by 0.3% month on month in July, after taking account of seasonal effects.
“This resulted in a slight pickup in the annual rate of house price growth from 1.5% in June, to 2.1% in July – the fastest pace since December 2022. However, prices are still around 2.8% below the all-time highs recorded in the summer of 2022.”
RESPECTABLE PACE
He adds: “Housing market activity has been holding relatively steady in recent months with the number of mortgages approved for house purchase at around 60,000 per month.
“While this is still c.10% below the level prevailing before the pandemic struck, it is still a respectable pace given the higher interest rate environment.
“For example, for borrowers with a 25% deposit, the rate on a 5-year fixed rate deal has been around 4.6% in recent months, more than double the 1.9% average recorded in 2019.
“As a result, affordability is still stretched for many prospective buyers. Indeed, for an average earner buying a typical first-time buyer property, the monthly mortgage payment is equivalent to around 37% of take-home pay, well above the 28% prevailing pre-Covid and the long-run average of c30%.
“Investors expect Bank Rate to be lowered modestly in the years ahead, which, if correct, will help to bring down borrowing costs. However, the impact is likely to be fairly modest as the swap rates which underpin fixed-rate mortgage pricing already embody expectations that interest rates will decline in the years ahead.
“As a result, affordability is likely to improve only gradually through a combination of wage growth outpacing house price growth (which is expected to remain fairly flat), with some support from modestly lower borrowing costs.”
|
Headlines |
Jul-24 |
Jun-24 |
|---|---|---|
|
Monthly Index* |
526.6 |
524.9 |
|
Monthly Change* |
0.3% |
0.2% |
|
Annual Change |
2.1% |
1.5% |
|
Average Price (not seasonally adjusted) |
£266,334 |
£266,064 |
* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)
INDUSTRY REACTION
Iain Mckenzie, The Guild of Property ProfessionalsIain McKenzie, Chief Executive of The Guild of Property Professionals, says: “Competing signals on consecutive days perfectly portray the housing market’s current confused mood – transactions falling one day, and prices up the next.
“While it’s good news to see that annual growth is up to 2.1%, it’s important to remember that prices remain 2.8% below the peak levels seen in summer 2022.
“While mortgage approvals have stabilised around 60,000 per month, this is still about 10% below pre-pandemic levels, showing restrained demand. Economic uncertainty may also be causing some potential buyers to be cautious about entering the market.
“I expect house prices to see modest growth over the next few months, with any interest rate cut likely to give the numbers a boost, but the impact would likely be gradual rather than immediate.”
Nicky Stevenson, Fine & CountryNicky Stevenson, Managing Director of Fine & Country, says: “July’s house price rise could mark a turning point for the property market and if interest rates drop today, optimists will be expecting a property boom in the latter half of 2024.
“This marks the fastest pace of growth since December 2022 and suggests renewed confidence in the housing sector and hopefully the start of a more stable period.
“It comes at a time when the broader economic picture is improving. Inflation has been held steady at the Bank of England’s target rate of 2%, meaning that measures taken to control rising prices are working.
“But while these factors may fuel increased activity, the full effects will take time to unfold. Increased housing supply and ongoing affordability pressures will act as a counterbalance, and help to ensure that any market growth remains sustainable in the long term.”
Guy Gittens, FoxtonsGuy Gittins, Foxtons Chief Executive Officer, says: “Property market momentum has been building steadily so far this year and, despite macro headwinds and the surprise of a snap election, we’re yet to see this momentum show any signs of slowing.
“Bank of England data released earlier this week shows that monthly mortgage approvals are now sitting at consistently high levels as pent-up demand across the market has been released and this is helping to cultivate higher rates of house price growth across the UK market.
“At Foxtons, we’ve also noted a significant increase in both buyer enquiries and seller instructions since the start of the year and this is now bearing fruit with respect to the level of sales completing.
“Even if interest rates remain held at 5.25% today, this is unlikely to dampen the enthusiasm being shown by buyers and sellers, who are adopting a ‘life must go on’ attitude and pressing on with their plans to transact.”
Verona Frankish, YopaVerona Frankish, Chief Executive of Yopa, says: “Whilst the summer sun may have only just made an appearance, the UK property market has been heating up for quite some time now and the uplift in buyer activity seen at the start of the year is finally starting to cultivate a consistent level of positive house price growth, with the market posting its best performance since December 2022.
“Regardless of whether rates are held or cut, homebuyers and sellers remain keen to make their move in 2024 and we expect that the second half of the year will prove even more fruitful.”
Ed Phillips, LomandEd Phillips, Lomond Chief Executive, says: “The housing market has already put in an incredibly resilient performance so far this year and we’ve seen both buyers and sellers return to the fray, enticed by the greater degree of stability that has come as a result of a hold on interest rates and the anticipation of reductions in H2 2024.
“This uplift in activity has helped to stabilise house prices and we’ve now seen a consistent level of growth materialise in recent months.
“Whilst hopes of an interest rate cut later today may be a tad premature, we anticipate this growing market momentum to build further over the remainder of the year and it very much looks as though an Autumn rates reduction could well light the touch paper for further market prosperity.”
Marc von Grundherr, Benham and ReevesAnd Marc von Grundherr, Director of Benham and Reeves, says: “The fastest rate of house price growth since December 2022 demonstrates just how much market conditions have improved so far this year.
“It’s clear that buyer confidence is high, despite the fact that interest rates are yet to come down.
“For those planning to make their move in 2024, now is the time to do so.
“Buyer demand is only likely to increase when interest rates are finally cut, making it very much a sellers market at present.”
