House price inflation was dampened by the end of the Stamp Duty Holiday; however, house prices remain more than 20k above year ago levels.
Annual house price inflation at 8.8% compared to 9.6% in May, according to the latest Halifax House Price Index. The average UK property price now stands at £260,358, with Scotland and Northern Ireland amongst areas seeing strongest growth.
Russell Galley, Managing Director, Halifax, said: “The average UK house price slipped by -0.5% in June, the first monthly fall since January. As a result annual house price inflation also eased back slightly from May’s 14-year high of +9.6% to stand at +8.8% in June. It is important to put such a moderate decrease in context, with average prices still more than £21,000 higher than this time last year, following a broadly unprecedented period of gains.
“With the stamp duty holiday now being phased out, it’s was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.
“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.
“Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market. Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms. At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.
“That power of homemovers to drive the market, as people look to find properties with more space, spurred on by increased time spent at home during the pandemic, won’t fade entirely as the economy recovers. Coupled with buyers chasing the relatively small number of available properties, and continued low borrowing rates, it’s a trend which can sustain high average prices for some time to come.
“However, we would still expect annual growth to have slowed somewhat more by the end of the year, with unemployment expected to edge higher as job support measures unwind, and the peak of buyer demand now likely to have passed.”
Mike Scott, Chief Analyst at estate agency Yopa, added: “The new Halifax House Price Index report for June differs from the Nationwide report in showing a slowdown in the housing market for the month, with a 0.5% monthly fall and the annual rate of increase slowing to 8.8%. They expect prices to rise more slowly in the second half of the year as unemployment rates rise and we pass the peak of buyer demand.
“But Yopa disagrees with this analysis — we think that the anticipated modest rise in unemployment as the furlough scheme finally ends will have little effect on the housing market, and we expect another surge in buyer demand in the autumn as people look to finally put the pandemic behind them and get on with their lives, perhaps making a fresh start of some kind which may well mean a change of home for many. We therefore expect strong price growth to continue for the rest of this year and into early 2022.”
