House prices rise ahead of key Bank of England rate decision
House prices rose at their fastest pace since the start of the year in July, as buyers shake off concerns about higher property taxes and push ahead with purchases.
Prices rose 0.4 per cent in June, according to the latest index from Halifax, with the average property price now £298,237 compared to £297,157 last month.
The annual rate of growth dropped to 2.4 per cent, from 2.7 per cent in July.
CEO of Propertymark, Nathan Emerson, said it was a “a glimmer of good news for consumers”.
“[It] proves that house prices are adapting to recent Stamp Duty changes despite other reports suggesting that housing activity has slowed due to these tax increases,” he added.
But buyers and sellers alike will be looking to the Bank of England later today to see what happens with interest rates.
The Bank is widely expected to cut the interest rate to four per cent to boost flagging job numbers, despite still-high inflation.
“The possibility of a reduction in mortgage costs is a frequent topic of conversation,” Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said another cut in interest rates this month should “further boost confidence and activity in the housing market”.
“Mortgage rates continue to edge downwards but it’s not just pricing that is improving with lenders also broadening policy, including increasing loan-to-income caps and lowering some income requirements, which is boosting affordability,” Harris said.
London prices tick up
House prices in London remained sluggish, rising just 0.2 per cent month on month.
Growth in the capital has been moderated by a lack of affordability, with houses averaging £539,914. The number of homes for sale is 16-19 per cent higher than a year ago, according to Rightmove.
“Many properties in London, particularly inner London, are actually losing value,” professor Joe Nellis, economic adviser at MHA, said.
“Families looking to invest in their first owned property are being forced out of the city by high property prices and the seemingly ever-increasing cost of living.
“Add to this the removal of stamp duty relief for first-time buyers from April this year and it is no surprise that demand for properties in the capital is declining, leaving sellers struggling to find buyers and prices beginning to show signs of falling,” Nellis added.
The median first-time house purchase tipped over the threshold for paying stamp duty in April, meaning the average buyer needed to shell out an additional £6,250 – something only 15 per cent of first-time buyers in London can afford, according to a survey from Fairview Homes.