House price growth remained ‘robust’ in July, with a market supported by high employment and a relatively limited supply of housing stock for sale.
Annual price growth was up to 11 per cent for the month of July, up from 10.7 per cent in June, according to Nationwide's latest house price index published today (August 2).
Prices are up 0.1 per cent month-on-month after taking account of seasonal effects, the twelfth successive monthly increase, keeping annual price growth in double digits for the ninth month in a row. This is despite rising cost of living pressures.
The average UK property price now sits at £271,209. Over the past year, this figure has increased by more than £26,000.
However, with the Bank of England widely expected to raise interest rates further and as pressure on household budgets intensifies over the rest of the year, we can continue to expect the market to slow, according to Nationwide's chief economist Robert Gardner.
There are tentative signs of a slowdown in activity in Gardner’s view, with a dip in the number of mortgage approvals for house purchases in June, but this has yet to feed through to price growth.
“Demand continues to be supported by strong labour market conditions, where the unemployment rate remains near 50-year lows and with the number of job vacancies close to record highs. At the same time, the limited stock of homes on the market has helped keep upward pressure on house prices,” said Gardner.
Senior pensions and retirement analyst at Hargreaves Lansdown, Helen Morrissey, said: "The housing market remains robust posting its 12th successive monthly increase – an extraordinary feat in the face of the biggest cost of living crisis in living memory.
"High employment and a limited number of homes on sale have supported market growth with activity strong across all buyer types."
Morrisey said the pandemic and the growth of flexible working was a huge factor in recent house price activity.
"Not having to go into the office every day made people reconsider where they live and whether they could move elsewhere to get a bit more space. This fuelled market behaviour in recent times but could dip as we emerge from the pandemic and more of us return to the office.”
Strength in transactions across board
In the three months to May, total housing market transactions were circa 20 per cent below the elevated levels seen as a result of the stamp duty holiday, but remained 5 per cent above pre-pandemic levels.
The latest figures found that home mover transactions, movers with a mortgage, have slowed more than other sectors.
“This probably reflects that the stamp duty holiday had more of an impact encouraging home movers to bring forward purchases, particularly for higher value properties,” Gardner said.
“Behavioural shifts due to the pandemic are also likely to have provided more of a boost to home mover activity, where such drivers have now faded,” he added.