The latest official House Price Index from the Office for National Statistics (ONS) and Land Registry, for July 2017, has been released.
It shows that the average UK house price increased by 5.1% in the year to July – unchanged from 5.1% in the year to June – to take it to £226,185.
The main contribution to the increase in UK house prices came from England, where the average value rose by 5.4% over the 12 months to July. In Wales, house prices were up by an average of 3.1% over the year. Scotland saw average price growth of 4.8%, while Northern Ireland recorded an average of 4.4%.
Regionally, the highest annual growth was in the East Midlands (7.5%), while the slowest rate was recorded in London (2.8%) in the 12 months to July. This is the eighth consecutive month that house price growth in the capital has remained below the UK average.
On a monthly basis, the average property value in the UK rose by 1.1% between June and July.
In terms of housing demand, the Royal Institution of Chartered Surveyors (RICS) has reported that price expectations were close to zero in July, while new buyer enquiries remained slightly negative.
The UK Property Transaction statistics showed that, in July, the number of seasonally adjusted property transactions completed in the UK with a value of £40,000 or above increased by 8.3% on an annual basis. Month-on-month, sales were up by 1.3%.
The latest official property transaction figures, for May 2017, show that the number of sales decreased by 0.5% yearly. A lower level of transactions in May 2016 was associated with the introduction of a higher tax rate on additional properties, introduced on 1st April 2016.
The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, responds to the figures: “This latest index provides the most compelling evidence yet that the UK property market has been able to shake off the woes of the previous year and snap election, to see positive growth during the summer months.
“The rate of growth during this period is higher than previously reported by Halifax and Nationwide, which is impressive given that this price data usually lags slightly behind other industry sources that base their figures on mortgage approvals, rather than sales completions.
“A sustained level of growth can now be expected, and it is unlikely that any further developments in the Brexit process should dampen this. Although the market has taken a wobble, UK homeowners should rest assured that the worst is now behind them and we won’t be seeing a repeat of the 2007 crash.”
John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, also says: “UK house prices appear to be bouncing back to growth as we move into the latter half of 2017. Whilst historically low mortgage rates and relatively low unemployment levels have a part to play, this is underpinned by strong overall buyer demand, which continues to outpace the number of homes coming to market.
“The UK’s housing shortfall needs plugging, but the initiatives designed to address the problem are blinkered at best. Yes, tax reform and Government schemes to help first time buyers will improve access to housing in the short-term, but, without a radical housebuilding plan, prices will continue to rise over the coming decades. Aspiring homeowners are looking to the private rented sector to support them on their path to ownership, so more action on Build to Rent properties would be a welcome development.”
An Economist at PwC, Thomas Fisher, continues: “The housing market data from the ONS and Land Registry shows that UK house price growth remained resilient through the summer months. House price inflation of 5.1% in the year to July is unchanged from June. This takes the average UK house price up to £226,000 in July.
“Regionally, house price growth continues to be weaker in London and the South East, where year-on-year growth rates in July were 2.8% and 3.8% respectively. Meanwhile, growth of over 7% in both the East Midlands and the East of England continues to drive average house price growth up for the UK overall.
“Following a summer of strong house price growth, the average house price in the South West hit a new high of £252,000, breaking through the quarter of a million mark for the first time.
“Factoring in continued pressure on household incomes in the second half of the year, we anticipate a likely weakening in UK house price inflation to around 4% on average for 2017.”
Shaun Church, the Director of mortgage broker Private Finance, also reacts: “Remortgaging roared back to life in July, as annual remortgage volumes reached their highest level since 2009. With interest rates remaining at or close to historic lows, now is a great time to switch to a more affordable deal.
“There are new signs of life in the buy-to-let market, although this is predominantly being driven by remortgage activity. However, new regulatory changes coming into force at the end of the month will make accessing mortgage finance harder for landlords with multiple properties: another deterrent for investors already punished by recent reforms.
“The continued squeeze on household incomes and an uncertain economic outlook mean that, while house prices continue to rise, they are doing so at a slower rate than in previous years. This is undoubtedly good news for prospective first time buyers trying to get on the housing ladder. However, homeowners and buy-to-let investors may be less enthused by a slower rate of capital growth on their investment.”
And Adrian Moloney, the Sales Director of OneSavings Bank, has this to say: “A shortage of housing supply is upholding property prices, while buyers continue to walk a narrow tightrope to homeownership. On the one hand, strong employment growth and historically low mortgage rates are supporting buyer demand, but, on the other, stagnant wage growth is being outstripped by consumer prices, making homes less affordable.
“Mortgage approval levels recovered last month, suggesting a small rebound in consumer confidence and affordability, despite the enduring economic unknowns that continue to cloud the long-term view.
“We’re still seeing ripples from the Stamp Duty increases of 2016, which caused a fair amount of turbulence in the property market, stymieing liquidity by discouraging people from buying or selling their homes. A move which has done little to address the underlying supply side issues that continue to fuel the housing crisis.”