UK house prices surge 5.7 per cent in June
UK house prices shrank by 0.3 per cent in June compared to the previous month, according to data released today.
But the growth rate rocketed 5.7 per cent on an annual basis last month, according to Halifax’s latest house price index, to take the average UK house price to £237,110.
Read more: UK house price growth falls to four-month low in June, says Nationwide
That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2 per cent – the best in two years until today’s figures.
Russell Galley, managing director of Halifax, said: “This extends the largely flat trend we’ve seen over recent months.
“More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty.
“Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”
However, he warned that a “major restraining factor” for the UK housing market was the lack of houses up for sale.
“With the ongoing lack of clarity around Brexit, people will be looking for more certainty in the coming months, both to encourage them to list their property and to create the confidence needed to encourage buyers,” Galley added.
“Of course, the likelihood of continued historically low mortgage rates will underpin prices in the near term.”
Halifax figures are a ‘complete outlier’
Howard Archer, chief economic adviser to the EY Item Club, dismissed Halifax’s data as a “complete outlier in annual terms”.
It compares to Nationwide’s annual growth rate of just 0.5 per cent in June and Office for National Statistics (ONS) data of 1.4 per cent growth for April.
“There are signs that housing market activity may have got a little help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit looks to have been limited,” Archer said.
“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but this has recently shown some signs of levelling off.”
Meanwhile, former Royal Institution of Chartered Surveyors (Rics) chairman, north London estate agent Jeremy Leaf, also questioned the figures.
“It paints a confusing picture with the annual house price increase actually greater than it was last month while comparative figures from 12 months ago are also unreliable,” Leaf said.
Buyers ‘looking beyond Brexit’
Leaf added that Brexit uncertainty has softened UK house prices, with today’s figures likely to dampen buyers’ appetites as prices continue to fall.
However, he said that many buyers have stopped delaying purchases and are pushing ahead with house hunts even amid the political uncertainty hitting the market.
“We are finding that some buyers, including some investors, are looking beyond Brexit and political uncertainty and are prepared to go ahead if they can perceive value,” he said.
Brian Murphy, head of lending for Mortgage Advice Bureau, said: “The market trend continues to follow a similar direction of travel to the one that we’ve observed since the beginning of this year; those who need to move are doing so, regardless of politically-driven news headlines, and are far more likely to make the decision to purchase based on their own circumstances should the need dictate.
“The availability of competitive mortgage products is also providing many with support, as lenders remain very much ‘open for business’ with some repricing downwards of late in order to gain more traction in the market.”
What will UK house prices do after Brexit?
EY’s Archer predicted that even in the event of a Brexit deal, the UK’s prolonged departure from the bloc will hamper growth of UK house prices over 2019.
The accounting giant predicts prices to rise only around 1.5 per cent this year.
“Prolonged uncertainty will weigh down on the economy and hamper the housing market,” Archer said.
“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”
While a lack of homes on the market and very low interest rates should prop up the market in the meantime, Archer warned the nature of Brexit will dramatically impact UK house prices.
Read more: London drags down UK housing market
With a deal, house prices could grow by around two per cent over 2020.
But in a no-deal Brexit, Archer warned house prices could “quickly drop” by as much as five per cent.
Main image credit: Getty