01 August 2024
If you are covering the latest Nationwide House Price Index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
“This morning’s house price index from Nationwide suggests that the property market has regained some degree of consistency, with another small uptick in house prices reported in June. UK house prices rose 0.3% month on month in July with the annual growth rate picking up to 2.1%, from 1.5% in June. This marks fastest pace of growth since December 2022.
“With the economic outlook looking more predictable, both buyers and sellers who have been treading water for the past few months are now re-entering the market and buoying prices.
“Later today, the Bank of England (BoE) is set to decide on whether to hold or cut its base rate, which will further influence the housing market’s dynamics. The BoE’s decision remains on a knife edge; a cut in rates or even a signal that a cut is on the near horizon will help mortgage rates fall further increasing confidence.
“Now inflation has returned to the Bank of England’s target rate of 2%, a rate cutting cycle should start in the not-too-distant future. This should bolster the housing market as prospective buyers become more willing to purchase a property in a stable or dropping interest rate environment.
“The monthly property transactions data for June which was released yesterday by HMRC paints a less rosy picture, as property purchases were marginally lower than in May, decreasing to 91,370 on a seasonally adjusted basis.
“The government’s plans to increase the supply of newly built homes may also eventually stabilise house prices. A larger supply of homes will better soak up the significant demand in the UK, which serves to push prices ever higher. However, even if Labour succeeds in its plans to build 300,000 new homes a year, it will still take some time before any impact is reflected across the property market.
“Similarly, affordability remains a significant challenge. Even if prices stabilize, they are still far out of reach for most first-time buyers who have seen house prices rise far quicker than their pay packets, keeping that first rung of the property ladder just out of reach.”
