House prices rose by 0.4 per cent in July, adding £1,122 to the cost of the average property, Halifax has reported.
But July’s month-on-month increase was not enough to stop the annual rate of price increase falling back (it was 7.6 per cent compared to 8.7 per cent in June, and the lowest annual rate since March). This, according to the latest Halifax survey, is a sign that the market is ‘cooling’ after a frenetic few months.
‘This easing was somewhat expected given the strength of price inflation seen last summer, as the market began its recovery from the first lockdown, and with activity supported by the start of the stamp duty holiday’, said Halifax managing director Russell Galley.
‘In cash terms, typical prices now stand at just over £261,000, a little below May’s peak but still more than £18,500 higher than a year ago.
‘Recent months have been characterised by historically high volumes of buyer activity, with June the busiest month for mortgage completions since 2008. This has been fuelled both by the ‘race for space’ and the time-limited stamp duty break. With the latter now entering its final stages (the zero percent rate only applies to the first £250,000 of the purchase price, before reverting back to standard rates from October), buyer activity should continue to ease over the coming months, and a steadier period for the market may lie ahead’.
Latest industry feedback suggests that the number of houses coming to the market is falling and estate agents are experiencing a drop in their available stock, said Galley.
‘This general lack of supply should help to support prices in the near-term, as will the exceptionally low cost of borrowing and continued strong customer demand.
‘Although there remains some uncertainty over the impact on employment from the unwinding of government support schemes, on balance the risks to the macro-environment are receding, with consumer confidence improving, the labour market recovering, and the economy expanding as restrictions are lifted. Overall, assuming a continuation of recent economic trends, we expect the housing market to remain solid over the next few months, with annual price growth continuing to slow but remaining well into positive territory by the end of the year’.