After years of rapidly rising house prices, the last few months or so have seen a definite slowing in price growth – and there have even been falls in house prices on a monthly basis. Indeed, the latest LSL/Acadata House Price Index shows that average house prices fell for the fourth consecutive month in July, so it looks as though the recent housing boom is drawing to a close.
The figures show that the average house price fell by 0.02% from June – after three months of prices falling by 0.6% – putting the price of a typical home at £298,906, over £6,000 below the peak of £304,960 recorded in March. The pace of annual growth also continued to slow, with prices rising by just 2.9% from July 2016, the lowest reading in four years (since July 2013).
The number of transactions slowed, too, dropping an estimated 9% in July from the previous month, hitting the lowest July level seen since 2012. This suggests that the housing market is pausing for breath, said the report, with both prices and transaction data appearing to decline as we enter the summer period.
However, there remains marked variation on a geographical basis, with some regions performing far better than others; Wales saw the weakest pace of annual growth, with prices rising by just 0.2% over the year, while the East of England saw the strongest growth of 5.1%. Overall prices are still rising, too – at least on an annual basis – so despite the slowdown, the market remains in relatively good health.
Oliver Blake, managing director of Your Move and Reeds Rains estate agents, explained that much of the latest slowdown, at least where transactions are concerned, could be due to seasonal factors, with there often being a dip at this time of year. However, "[it] may also be down to the buy-to-let slowdown as a result of tax changes", he said, with fewer landlords taking the plunge since new rules came into effect in April.
Not only that, but wider uncertainty could also be taking its toll, with Peter Williams and John Tindale of Acadata saying that "the political and economic uncertainties surrounding the outcome of the election have further unsettled housing sentiment". The continued decline in house price growth – in particular the fact that the average is now back below the £300,000 benchmark – "is symbolic of the current state of the market and one which will be viewed negatively by many home buyers," they said, "adding to the sense of malaise".
Unfortunately, the slowdown is widely expected to continue for the rest of the year, which may not come as welcome news to homeowners looking to boost their equity. Nonetheless, a measured pace of growth should still be apparent, so make sure you can capitalise on that with the best mortgage rate for your needs.
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