On a monthly basis, houses prices were up 1.6% – the highest increase this year, and the highest average house price since the Halifax House Price Index began.
According to the latest Halifax House Price Index, house prices in July were 3.8% higher than in the same month a year earlier. However, uncertainty has not gone away, and remains with likely greater downward pressure on prices in the medium term.
Russell Galley, Managing Director, Halifax, said: “The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices.
“Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.
Russell Galley, Managing Director, Halifax, said: “Following four months of decline, average house prices in July experienced their greatest month on month increase this year, up 1.6% from June and comfortably offsetting losses in 2020.
“However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent. In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium-term.”
Ross Counsell, chartered surveyor and director at Good Move, added: “Annual house prices across the UK have grown by 1.6% in July, and the average UK house price of £241,604 is 3.8% higher than it was a year ago, which signals great growth in the housing market.
“Today’s statistics should therefore help reassure buyers and sellers in the UK that the housing market is starting to return to normalcy post-lockdown.
“Although we expect to see a continued boost in house prices across the UK in the short term, there is still a great deal of uncertainty surrounding the long-term effect of Coronavirus, especially when government measurements such as the Stamp Duty holiday end. Therefore, the government must employ solid measures to help the market recover in the long-term.”
Data from Nationwide add to the positive momentum, showing that annual house price growth recovered to 1.5% in July. Similarly, prices were up 1.7% month-on-month, after taking account of seasonal factors, reversing last month’s fall.
Robert Gardner, Nationwide’s Chief Economist, said: “On a seasonally adjusted basis, house prices in July were 1.6% lower than in April. The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.
“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing. “Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage. These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.
“However, there is a risk this proves to be something of a false dawn. Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead. Stamp duty holiday savings greatest for those in London & South.
“There is also a significant skew in the beneficiaries towards wealthier households which are disproportionately in London and the South of England, where average house prices are significantly higher.
“Typical savings are likely to be fairly modest for the majority of buyers in the north of England, Scotland and Northern Ireland. In Wales, the previous lower threshold for LTT of £180,000 was already above the average house price in the principality. Moreover, some of the stamp duty saving is likely to get passed on in terms of higher house prices. The stamp duty holiday is also likely to lead to increased volatility in transactions levels, especially around the end of the holiday, which in the past has led to significant spikes in activity.”
