House prices in the UK experienced a 0.5% fall in the month to July, following the record highs seen in June.
The Nationwide House Price Index for July shows annual growth was still significant at 10.5%, but down from the 17-year high of 13.4% a month earlier.
The average UK house price now stands at £244,229, compared to £245,432 in June.
Nationwide chief economist Robert Gardner says the modest fallback in July was “unsurprising given the significant gains recorded in recent months”, adding that 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.
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Gardner says higher priced properties have been driving the increase in housing market activity, with Land Registry data indicating that the number of transactions involving properties bought for £500,000 or higher increased by 37% over the 12 months to March 2021, compared to a rise of 2% for all properties.
“As a result, between Q1 2020 and Q1 2021 the share of transactions involving a property valued at £500,000 or above has increased from 12% to 18%,” says Gardner.
While stamp duty was a significant contributor to UK house prices, the Nationwide data finds the main driver of transactions was from those who would have moved regardless of whether the tax holiday had been in place.
“Amongst homeowners surveyed at the end of April that were either moving home or considering a move, three quarters said this would have been the case even if the stamp duty holiday had not been extended beyond the original March 2021 deadline,” says Gardner.
“Shifting housing preferences appear to have been the more important factor in driving the increase in housing market activity, with people reassessing their housing needs in the wake of the pandemic.”
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Together director of sales Sundeep Patel says: “Despite house price growth slightly cooling off, we’re still seeing double digits. Indeed, while the stamp duty holiday and cheap mortgage deals boosted prices, the growing shortage of available stock, and the fact that property continues to be sold for more than the asking price, threatens the opportunity for those not already on the ladder to find something affordable this year. There is a concern that first-time buyers may struggle to even get a look in, as deposit-rich buyers such as landlords and home movers snap up properties.
“There’s an increasingly a race for space as well, as we see potential buyers are also showing more of an interest in houses over flats and apartments – largely triggered by the desire to have more living space and a garden as we settle into hybrid working, and come to realise the fact that many of us will be spending significantly more time at home for the foreseeable”.
By Bek Commane
Source: Mortgage Finance Gazette
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