House prices have risen by 8.3% in the year to July 2016 – down from 9.7% in June – putting the value of an average property in the UK at £216,750, according to the first official report since the EU referendum.
The UK House Price Index, which is calculated by the Office for National Statistics (ONS) and the Land & Property Services Northern Ireland, also reports that house prices have gone up by 0.4% since June.
Price pressures continued to grow in July the Index states, reflecting the strength of demand relative to supply in the housing market, but “there were indications that some of the heat had been taken out of the market, with several indicators pointing towards weaker housing demand and supply in recent months”.
Regional housing breakdown
In England, the annual increase was slightly higher than the UK average rise at 9.1% in the year to July, with an average house costing £232,885. On a monthly basis house prices were up by 0.5% since June.
In contrast, annual house price growth in Scotland was just 3.4% and the monthly increase was 1.3%, putting the average house price at £143,711.
There was a similar picture in Wales, with annual house price growth at 4% and an average property price of £144,828. However, monthly house prices fell by 1.8% in June.
In Northern Ireland, annual house price growth was 7.8% and the monthly increase was 3.8% – with the average house costing £123,241.
London market ‘robust’
Despite many predictions that house prices in London would fall after the Brexit vote, monthly prices rose by 1% since June. Annually, house prices were up by 12.3%, with the average property in the capital now priced at £484,716.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, says: “London is defying the doom-mongers. Monthly figures fluctuate and should be treated with caution, nevertheless a 1% jump in prices in July, combined with an annual increase of over 12%, looks robust.”
Over the year, the East of England witnessed the greatest house price growth – up by 13.2% – while on a monthly basis, the North East experienced the most significant growth at 2.3%.
The South East also enjoyed double-digit annual house price growth at 11.9%, with monthly house prices up by 0.6%.
Regions experiencing a more negative market were Yorkshire and The Humber, which saw annual house price growth of 4.7%, and the West Midlands, which had a monthly price fall of -0.8%.
Figures were also disappointing for the number of house sales in July, which fell by 0.9%, putting property sales on a monthly basis below levels seen in 2014 and 2015 and before the stamp duty changes in early 2016.
First-time buyers paid, on average, £182,756 for their first property in Great Britain (figures are not available for Northern Ireland) – up 8.1% over the year.
‘Market demand remained resilient’
Commenting on the data, Thomas Fisher, economist at PwC, says: “Today’s data from the ONS shows a moderation in house price growth from 9.7% in the year to June to 8.3% in the year to July. But house prices still edged up by 0.4% between June and July.
“This suggests that market demand remained relatively resilient after the Brexit vote, despite some slowdown in mortgage lending. However, as many of these transactions will have been in motion since before the referendum, more data will be needed to make a proper assessment of how the referendum result is affecting the housing market.
“Our own expectation is that the UK housing market will cool not crash. In our main scenario, average UK house price growth is projected to decelerate to around 5% in 2016 and around 1% in 2017.”
Andrew McPhillips, chief economist at Yorkshire Building Society, adds: “House price growth slowed in July as people postponed their decision to get on to the property ladder until they can be more certain of the future of the UK economy. We expect the market to be volatile in the medium term, as any dips in house prices could be swiftly followed by an increase as prospective buyers look to make the most of lower prices.
“Looking to the long term, we expect people’s desire to own a property, combined with the persisting lack of housing stock to cause house prices to increase in the future. This will affect people across all tenures by both limiting the number of people who are able to own their desired home while also pushing up the cost of renting. It’s paramount that the UK significantly ramps up its house-building efforts in order to make homes more affordable in the long term.”