Robert Gardner, Nationwide's Chief Economist, had this to say: “The annual pace of house price growth remained broadly stable in July at 2.9%, only a touch lower than the 3.1% recorded in June.
On the surface, this appears at odds with recent signs of cooling in the housing market. The number of housing transactions dipped to their lowest level for eight months in June, while in the same month the number of mortgages approved for house purchase moderated to a nine-month low of c.65,000.
But a lack of homes on the market appears to be providing support, with annual house price growth remaining only just outside the 3-6% range, that has been prevailing for most of the past two years.
This pattern looks set to be maintained in the near term. Survey data point to relatively sluggish levels of new buyer enquiries, but at the same time surveyors report that relatively few properties are coming onto the market (and at a time when the number of homes on estate agents’ books is already close to thirty year lows
Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year and there has been little to suggest a significant departure from recent trends in the quarters ahead. While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living. This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead.
Nevertheless, constrained supply is likely to continue to provide support for house prices and, as a result, we continue to expect prices to rise by c.2% over 2017 as a whole - only modestly lower than the levels recorded in recent months.”
Russell Quirk, founder and CEO of eMoov.co.uk, commented: “UK homeowners will have their fingers crossed that this turn around in price growth will be more consistent than the British summertime.
At a glance, it looks as if the dark clouds of buyer and seller uncertainty are finally starting to lift from the UK housing market, with welcome signs of positive property price growth beginning to shine through.
The summer months can generally be a slower time of year with many taking a break from their sale to go away, so it is promising that the market has bounced back despite the slump in transactions and mortgage approvals witnessed in June.
Although buyer demand may take some time to return to normal levels, a sustained shortage of stock should continue to stimulate an upward price trend.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Although these figures on the face of it look quite encouraging when one considers the fall in transactions, it is clear that prices are being supported by a lack of property on the market. We would have expected transactions in particular to be higher compared with last year bearing in mind how much quieter the market was 12 months ago following the introduction of the stamp duty surcharge.
On the plus side, activity could be much lower bearing in mind current political uncertainty and fortunately there does seem an enthusiasm among serious buyers and sellers to get on with the job in hand. The current climate is also providing an opportunity for first-time buyers at least to better compete for smaller properties."
Jonathan Hopper, managing director of Garrington Property Finders, comments: “Constrained supply is helping price growth defy economic gravity.
Despite the slowing economy and shrinking real wages, house prices continue to creep upwards at a steady pace. While there’s little evidence yet of the hoped-for surge in post-election demand, we are seeing a return to market of a number of cautious buyers who had been waiting for a little more stability before proceeding.
In many areas it is they who are setting the tempo of the market - acutely price sensitive and willing to walk away if they feel the price isn’t right. With the RICS data showing a steady fall in both the number of homes and the number of buyers coming to market, we’re seeing a slow-motion standoff on prices.
Limited supply is propping up prices, while the limited number of buyers is giving the astute househunter the leverage to negotiate hard on price and secure sizeable discounts. With pragmatic sellers often willing to trade price reductions for the certainty of a sale, the market’s fundamentals remain in place even if the pace is slowing. With the summer holidays now in full swing, this low-growth limbo is likely to continue for a while longer.”
Jonathan Samuels, CEO of Octane Capital, said: "Weak supply has once again ridden to the rescue of house prices.
While demand is down at a time of economic and political uncertainty, the shortage of homes, both for sale and being built, is preventing prices from falling sharply. The prospect of the first interest rate rise for many years, and the potential fallout that will ensue, is causing many households to err on the side of caution.
Record low mortgage rates are helping what demand there is but it's hard to see anything other than a sideways moving market for the rest of 2017. In the current climate, it's unlikely demand will increase sufficiently to drag the market out of its current rut."
