UK house prices climbed 1.8 per cent higher in August compared to the same time last year, Halifax’s House Price Index revealed today.
That is the fastest rate of growth since April’s 2.6 per cent increase, Halifax’s figures showed.
However, revisions to modernise Halifax’s measure means previous lofty growth of 4.1 per cent in July has been downgraded to just 1.5 per cent.
That spelled out challenges for the UK property market as Halifax found that UK house prices rose just 0.3 per cent month to month in August.
Meanwhile quarterly growth climbed just 0.1 per cent to leave the average UK house price at £233,541 – little better than July’s £232,876.
Halifax warned that the main driver of UK house prices remains a “dearth of available properties”.
Russell Galley, managing director of Halifax, said:
There was no real shift in house prices in August. This further extends the predominantly flat trend we’ve seen over the last six months, with the average house price having barely changed since March.
While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong.
Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should also not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.
Lack of supply fuels UK house prices growth
Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed with Halifax that a shortage of available properties is boosting the market amid Brexit uncertainty.
“Lack of supply, an issue which shows no sign of being resolved anytime soon, is supporting property prices, despite all the political and economic uncertainty,” he said.
“Mortgages remain cheap, with lenders cutting rates even further this week as Swap rates continue to fall.”
Jeremy Leaf, a north London estate agent and former chairman of the Royal Institution of Chartered Surveyors (Rics), said only sellers “prepared to negotiate hard” are making sales.
Lucy Pendleton, founder of James Pendleton estate agent, warned that the way sellers think about their homes is at least partly responsible for the meagre number of homes on the market as prices fall.
“People view their home as a piggy bank which can accept money from everyone but shouldn’t be opened by anyone but them,” she said.
“The tendency to think of capital growth in homes as money earned instead of profit yet to be realised is one of the enduring traps sellers fall into.”
Brexit ‘slams door’ on UK house prices
Halifax’s UK house prices measure has slipped back from some incredibly high annual growth figures to show annual growth below the rate of inflation.
Pendleton warned that Brexit uncertainty is continuing to press down on prices.
“Brexit has slammed the door on the property market’s fingers, leaving a crack through which only modest price growth can be achieved,” she warned.
“The market has continued its idling path to what feels like an inevitable grinding halt. It’s very hard to read sentiment at times like this and that’s partly because housing markets fall quickly when they do retreat but have a tendency to bump along for a while with tiny rates of growth beforehand in the absence of a major economic shock.”
No autumn bounce for UK house prices
While August’s 1.8 per cent increase in UK house prices is the biggest annual rise recorded by Halifax since April’s 2.6 per cent increase, experts warned worse could com,e
Pantheon Macroeconomics’ chief UK economist Samuel Tombs said UK house prices could pick up, but that they won’t see the huge jumps in value that have underpinned London and the south east for years.
“We continue to expect house prices to rise at around a two per cent year-over-year rate over the coming months, as falling mortgage rates and momentum in nominal wage growth counterbalance the impact of Brexit and political uncertainty on buyers’ confidence,” he said.
Gareth Lewis, commercial director of property lender MT Finance, added that this could be the “new norm” for the property market.
“Gone are the spikes in pricing, the unpredictable boom and bust, replaced with a more positive, sustainable performance of two or three per cent growth in line with inflation,” he said.
“There is that worry that the mess unfolding in Parliament means there won’t be an autumn bounce this year but consumer confidence is proving to be remarkably resilient,” he added.
“Lenders are still chasing market share, which is being reflected in cheaper mortgage rates and high-street lenders looking at specialist lending to boost their margins.”
House prices rose just 0.3 per cent on a monthly basis, however, and growth hit just 0.1 per cent in the three months to the end of August, compared to the quarter before.