The average UK house price was £241,604 in July which represents a decline for the fourth consecutive month, according to the latest House Price Index by Halifax.
Despite the overall fall, a ‘mini-boom’ drove prices up in July to 1.6% higher than in June on a monthly basis. However in the latest quarter, house prices were 0.2% lower than the preceding three months. House prices in July were 3.8% higher than in the same month a year earlier, with the index indicating that uncertainty remains with likely downward pressure on prices in the medium term.
Russell Galley, managing director at Halifax, said: “Following four months of decline, average house prices in July experienced their greatest month on month increase this year, up 1.6% from June and comfortably offsetting losses in 2020. The average house price in July is the highest it has ever been since the Halifax House Price Index began, 3.8% higher than a year ago.
“The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices. Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.
“However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.
“In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium-term.”
Mike Scott, chief analyst at Yopa, added: “The Halifax recorded a 1.6% increase in house prices for the month of July, pushing the annual rate of growth up to 3.8%. Following four months of declining prices, this suggests that the stamp duty holiday is having an immediate effect on prices, and so most of the benefit of the holiday is going to sellers rather than buyers.
“However, this surge in prices may not last long, and the market may well turn down again as government schemes to support the economy come to an end and unemployment rises. We expect a slow start to the year in 2021, by which time it will be too late to make an offer on a house and expect to complete the purchase before the end of the stamp duty holiday on 31 March.”
This post has originally been featured in Property Wire.