UK house prices are back in growth, with the UK average increasing by 0.4 per cent in July, following a 0.2 per cent dip in June, according to the Nationwide House Price index.
The relatively modest month-on-month rise means that the annual pace of house price growth edged up to 3.5 per cent from 3.3 per cent previously.
Nationwide – which typically offers a more subdued house price inflation than other indices such as Halifax – said the growth suggested the market was starting to stabilise.
Robert Gardner, Nationwide's chief economist, said: “After moderating over the past 12 months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around four per cent.
“This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand.”
Gardner added that the outlook remained “encouraging” when it came to demand, as employment growth had been robust in recent quarters, with wages also rising, while mortgage rates continued to be at all-time lows. Consumer confidence was benefitting as a result.
But it was a less clear picture on the supply side.
“The number of new homes under construction has started to pick up, albeit from historically
low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term,” he said.
The changes to stamp duty are having an impact on the market “with much less bunching of transactions around the £125,00, £500,000 and in particular the £250,000 price points,” Gardner said.
Nearly 235,000 purchasers in England and Wales have paid less tax under the new regime, with an average benefit of around £1,800, with those in the South benefitting most.
However, 5,000 people – two-thirds of whom were in London – have paid more than they would have done six months previously, with an average of £28,000 more tax being stumped up.
Despite this, Nationwide estimates that around £275m less tax is being paid under the new regime.