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Average house prices fell 0.5% in June

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Written by:
07/07/2021
Despite the dip property prices are still up by an average £21,000 over the last year
Average house prices fell 0.5% in June

Average house prices fell by 0.5% in June, pulling back annual house price inflation to 8.8% compared to 9.6% in May, said Halifax.

Average UK property prices are now £260,358, still up £21,000 from the year before.

House price inflation is highest in Wales (12.0%), said the country’s largest lender, with the country seeing it’s strongest growth since April 2005.

Northern Ireland (11.5%), the North West (11.5%), Yorkshire and Humberside (10.9%) and Scotland (10.4%) all saw double-digit gains.

At the other end of the scale, the South of England lags behind the rest of the country (Eastern England and the South East recording inflation rates of around 7%).

Greater London has seen house price inflation of just 2.9%.

Russell Galley, managing director of Halifax, said: “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.

“We 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.”

Stuart Law, CEO of the Assetz group, is more optimistic, adding: “While it is expected that the end of the stamp duty holiday will initially have a dampening effect on house prices, we expect demand to continue to be strong, both later in the year and next year, pushing prices up over the longer term. In our view, prices could well rise by 8-10% in both 2021 and 2022 due to a combination of factors going forward.

“Firstly, we believe interest rates will stay very low going into next year helping ensure mortgage deals remain relatively cheap while it is also expected that inflation and labour shortages will lead to increased wage growth, both of which will be key factors in driving market activity and keeping house prices high. Whilst inflation normally leads to interest rates being raised, this time the Bank of England has suggested this will not happen if inflation is temporary.

“More widely, it is becoming increasingly clear that the impact the pandemic has had on housing trends is here to stay, with homeowners looking for more spacious homes in suburban and rural areas to make the most of our new hybrid way of living and working. Increased demand for new types of housing in newly popular locations will only amplify the ongoing housing crisis in the UK, ultimately pushing up prices over the longer term, particularly for suburban and countryside houses.”

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