House prices hit new record in July as growth picks up
House prices picked up in July with the annual rate of growth rising from 1.8% in June to 3.3% last month, the highest increase since last November, data showed.
On a monthly basis, prices rose by 1.4% in July hitting a new record of £230,280.
In the latest quarter from May to July prices were 1.3% higher than the preceding three months, according to the Halifax house price index.
Russell Galley, managing director at Halifax, said that even though the house price growth improved, housing activity remained soft as mortgage approvals rose for the second month in a row.
He said: “Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.
“In contrast, the labour market remains robust, with the numbers of people in employment rising by 137,000 in the three months to May with much of the job creation driven by a rise in full-time employment.
“Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices. With regards to the recent rise in the Bank of England Base Rate, we do not anticipate that this will have a significant effect on either mortgage affordability or transaction volumes.”
Kevin Roberts, Legal and General Mortgage Club director, added: “House prices have been moving at a sustainable rate for some time now, but the positive effects are not necessarily being felt by everyone looking to purchase a home.
“A lack of housing continues to challenge many would-be buyers. This barrier, and the ongoing struggle many younger buyers face trying to save while renting, is forcing thousands to rely on the Bank of Mum and Dad, Help to Buy, or in some cases both.”
Jonathan Samuels, CEO of the property lender Octane Capital, said the annual rate of growth may have shot up between June and July but weak supply rather than robust demand is the primary driver.
He added: “The market might look punchy on the outside but it’s pallid on the inside. Transaction levels overall are low and it’s hard to see them picking up materially in the months ahead as Brexit uncertainty heightens.
“The impact of last week’s interest rate rise remains to be seen. While it’s not a massive hit in real terms, how it impacts sentiment is key. The jobs market is holding up but the direction of inflation and wage growth will be key as we enter the latter part of the year.”