07 August 2024
If you are covering the Halifax House Price Index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
"The Halifax House Price Index for July shows that house prices have edged up. The average house price increased by +0.8% in July while the annual growth rate is now +2.3%. With summer typically marking a busy period for the property market, this result following three months of relatively flat results, reflect the difficult economic conditions we find ourselves in.
"However, given that the Bank of England has cut its base rate from 5.25% to 5%, we may see the market start to heat up. Although the cut in rates will have a relatively minor impact on the amount people pay if they are on tracker mortgages or standard variable rate mortgages (SVR) and no impact if they are on a fixed rate, the change in rates does a lot for buyer and seller confidence.
"Similarly, the price of fixed-rate deals had largely already priced in a small cut to the base rate, so we have not seen a huge change in the cost of these deals.
"A feeling that rates are going in the right direction though will help many people decide to take the leap back into the market, pushing up demand for homes. Those on the fence about selling their home may also feel the time is now right.
"The autumn may therefore prove to be busier than anticipated. However, prospective buyers are now faced with a dilemma about whether to fix their mortgage now or wait for rates to come down further. Lots of clients in the midst of remortgaging or buying are considering tracker mortgages without early repayment charges, allowing them to benefit from future rate cuts with the option to fix when rates are lower. However, many people like the certainty of a fixed-rate deal.
"Further house price rises, while naturally good news for homeowners, continue to make it incredibly difficult for first-time buyers to find a route to homeownership without significant help from the Bank of Mum and Dad or having to wait until much later in life to build up the necessary size of deposit. This will end up being a difficult area for the government to truly tackle, as while supply and demand play a large part in why house prices are rising, an even bigger piece of the puzzle is slow wage growth when compared to house price inflation."
