UK house prices increased at the highest annual rate since May 2003 in the year to July, the latest data from the Office for National Statistics (ONS) has revealed.
Annual house price growth in July was 15.5%, up from 7.8% in June, marking the biggest increase in 19 years.
The average UK house price was £292,000 in July 2022, which is £39,000 higher than this time last year.
Average house prices increased over the year in England to £312,000 (a 16.4% annual increase), in Wales to £220,000 (17.6%), in Scotland to £193,000 (9.9%) and in Northern Ireland to £169,000 (9.6%).
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However, commentators pointed out that the annual rate of price growth had been pushed artificially high because in July last year prices dropped in response to the end to the most generous period of last year’s stamp duty holiday.
The ONS said the sudden doubling of the annual rate of price growth – from 7.8% in June to 15.5% in July – “was mainly because of a base effect from the falls in prices seen this time last year as a result of changes in the stamp duty holiday”.
Jonathan Hopper, chief executive of Garrington Property Finders, said the big jump was “first and foremost a statistical anomaly”.
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He commented: “Those of a nervous disposition may want to look away from the official house price data in the coming months, as we’re set for a rollercoaster ride.”
Sarah Coles, a senior personal finance analyst at the investment firm Hargreaves Lansdown, said the doubling of the rate of price growth was “not what it seems”.
“It doesn’t affect the outlook for the market, which is facing real challenges,” she added.
Although the ONS data is a little historic, Jason Tebb, CEO of OnTheMarket points out that buyer and seller sentiment remained remarkably stable in July.
He commented: “Increased stock levels mean the inevitable rebalancing of the market continues, with rising inflation and the prospect of higher energy bills continuing to have an impact.
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“With evidence of a return to a seasonally-driven housing market, we wait to see whether a further pick-up in activity in the autumn materialises, with buyers keen to proceed before Christmas.”
Simon Gerrard, MD of Martyn Gerrard Estate Agents, commented: “If we didn’t have a chronic under-supply of properties, house prices would unquestionably be falling across the UK – as buyers see their budget crumble due to rising mortgage rates. But this chronic supply-demand imbalance is underpinning prices and we are still seeing a significant number of buyer enquiries.
“Our new prime minister has the power to do something about our housing emergency. The key question is whether we see Liz Truss take up the challenge to stimulate housebuilding, and in-turn, ease the market’s supply issue. Genuine planning reform is the tonic required, and only Ms Truss has the power to dispense it and get Britain building again.”
By MARC DA SILVA
Source: Property Industry Eye