Annual house price growth remains in double digits but down month-on-month

House price growth in the UK is slowing down, but currently remains in double digits, according to the latest Nationwide House Price Index.

The July report on UK house prices from Nationwide states the following highlights:

• Annual house price growth remained in double digits, but fell back to 10.5%
• Prices are down 0.5% month-on-month
• The average house price is now £244,229

Robert Gardner, Nationwide’s Chief Economist, comments within the report: “Annual house price growth slowed to 10.5% in July, from the 17-year high of 13.4% recorded the previous month. In month-on-month terms, house prices fell by 0.5%, after taking account of seasonal effects, following a 0.7% rise in June.

“The modest fallback in July was unsurprising given the significant gains recorded in recent months. Indeed, house prices increased by an average of 1.6% a month over the April to June period – more than six times the average monthly gain recorded in the five years before the pandemic.

“The tapering of Stamp Duty relief in England is also likely to have taken some of the heat out of the market. The nil rate band threshold decreased from £500,000 to £250,000 at the end of June (it will revert to £125,000 at the end of September). This provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties. For those purchasing a property above £250,000, the maximum Stamp Duty saving reduced from £15,000 to £2,500 after the end of June.”

Colby Short, Founder and CEO of GetAgent.co.uk, comments: “It’s probably fair to say that while an extension was welcomed, the Stamp Duty holiday is starting to linger over the market like a bad smell.

“For the vast majority, the intended benefit has now been nullified thanks to the huge rates of house price growth seen since launch. With the long delays that have also ensued as a result of such unprecedented levels of buyer demand, it’s arguably never been less appealing to embark on the archaic process of buying a home.

“Despite this, homebuyers have, and will, continue to flock to the market in order to realise their dream of homeownership and this will help maintain the upward price trends seen of late.”

James Forrester, Managing Director of Barrows and Forrester, comments: “The recent heatwave may have subsided but the property market is still running red hot and, despite the odd month to month wobble, we continue to see double-digit annual growth which is a phenomenal rate to have been sustained so consistently.

Marc von Grundherr, Director of Benham and Reeves, comments: “Even the apocalyptic wet weather seen over the weekend can’t dampen the UK housing market, with yet more strong upward movement despite the impending expiry of the Stamp Duty holiday.

“Even in London where the rate of house price growth has been less pronounced than the rest of the UK, homes are selling at a rate of knots and homesellers are achieving a far higher percentage of asking price than they were just a few short months ago.”

Ben Taylor, CEO of Keller Williams UK, comments: “A severe shortage of housing stock, the low cost of borrowing and a high level of buyer confidence are the perfect ingredients to maintain what has been a pretty impressive run of house price appreciation.

“The widespread talks of a market cliff edge once the Stamp Duty holiday ends have now turned to hushed whispers and while record rates of growth will inevitably lead to some monthly ups and downs, the long-term health of the UK property market is looking very good at present.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “House prices took a small pause from their breathless race to new heights this month, but there was no sign of a serious slowdown due to the winding down of the Stamp Duty holiday.

“Demand is still strong and, while there has been a slight adjustment in some areas, house prices are still way above the average figures we’ve seen in recent years.

“Let’s not forget as well that prospective buyers looking at properties under £250,000 are still eligible for the break in Stamp Duty and it’s likely that prices will remain high in those areas until the scheme ends.

“Buyers are still desperate to get their hands on those elusive detached family homes away from the big cities, and prices will keep being pushed up while supply lags behind.

“It’s going to be interesting to see how the demand for properties changes as we come into the autumn. This will give us the opportunity to evaluate just how successful the Stamp Duty holiday has been at keeping the property market buoyant since the start of the pandemic.”

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, says: “Annual house price growth remains at a gallop though it has moderated slightly from last month’s exceptional spike.

“While the Chancellor’s tax incentives have begun to taper, a pronounced dip in housing stock means that demand continues to outweigh supply, and this imbalance should continue for some time to come.

“Going forward, the market will remain buoyant though the dynamics are already starting to shift.

“While the clamour in recent times has been for bigger properties with more outdoor space, we may see luxury apartments start to come back into vogue as the drift back to the office starts to gather pace in the big cities.

“In addition, we are still awaiting the return of international buyers which we expect to happen in the autumn, something that should prove a huge boost for Prime London which has been sluggish of late.

“In the meantime, first-time buyers finally have grounds for greater optimism as they continue to pay no Stamp Duty on properties less than £300,000 while others are now paying much more. This means the balance may finally be shifting back in their favour when bidding on more modestly priced homes, particularly with the added firepower of first-time buyers mortgages behind them.”

Lucy Pendleton, property expert at independent estate agent James Pendleton, comments: “The market’s minor monthly dip shows it was unmoved by the end of the most generous Stamp Duty discounts. Annual growth is roughly back to where it was in May, as prices continue to be pinned to the ceiling by a shortage of property hitting agents’ windows.

“This isn’t a market that agents or the public want to see because this absence of abodes is pushing the market into a doom loop of thinning supply. People are holding off selling their home because they lack all faith they will be able to find something they want to buy, therefore restricting the number of homes available even further.

“This dynamic supports prices but it can’t continue forever. Eventually this paucity of property will prove the trigger for a change of direction, partly because it lends more weight to the activity of first-time buyers who have tighter price pressures than those moving home higher up the chain.

“This tension will have to be released and could spell a rather unusual climax to the bull run, neatly reflecting its unusual beginnings last summer. We’ll look back on this period as one that completely defies the usual rules but basic economics will always win out in the end. Affordability pressures will eventually force the market into a reality check but first-time buyer support and low interest rates should prevent the boom from unwinding too rapidly.”