House prices hold firm in July: UK HPI

Average UK house prices showed a degree of resilience over the 12 months to July, according to this morning's data released by ONS and Land Registry who report that annual house price growth during the period saw a slight increase of 0.6%.

Related topics:  Finance,  Property,  house prices,  ONS
Property | Reporter
20th September 2023
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"While the market backdrop remains challenging, slightly cooling ONS inflation figures and a growing consensus that the Bank of England has neared the top of its base rate increases has brought some needed respite"
- Jean Jameson - Foxtons

The welcomed period of stability comes amid a raft of Base Rate increases, which have heaped downward pressure on house prices and with all eyes on the Bank's next move (scheduled for tomorrow) many will hope that the worst of it is now behind us.

This morning's figures show that the average UK house price was £290,000 in July - £2,000 higher than 12 months ago, but £2,000 below the recent peak in November 2022.

Regional breakdown

Average house prices increased over the 12 months to July by 0.6% in England, 0.1% in Scotland, and 2.7% in Northern Ireland. Average house prices in Wales decreased by -0.1%.

The North East saw the highest annual percentage change of all English regions in the 12 months to July (2.7%), while the South West saw the lowest at -1.0%.

London saw an annual inflation rate of -0.8%. While London prices increased between June and July 2023, they increased by a larger amount between the same months last year.

On a seasonally adjusted basis, the average UK house price decreased by 0.5% in July, following a month-on-month increase of 0.7% in June. On a non-seasonally adjusted basis, prices rose by 0.5% in July, following a rise of 1.1% in June.

Director of Benham and Reeves, Marc von Grundherr, commented: “Much has been made about the decline of the property market, but the truth of the matter is that house prices continue to sit at their highest levels this side of the Millennium and only marginally off the market peak seen towards the backend of last year. 

"There are sure signs that stability is returning to the London market, with the capital seeing one of the strongest rates of monthly house price growth. This has been largely driven by international buyers who have been less deterred by the current mortgage landscape and the higher rates that have caused many domestic buyers to sit on the fence. 

"So yes, mortgage affordability remains an issue for many buyers, however, those looking to sell should rest assured that their home will still command a solid good price in the current market, whether that be in London or any other area of the nation.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“The true test of the property market is how sold prices are performing and, as it stands, we’re yet to see any notable dip in this respect. Certainly not the 30% crashes predicted by some industry 'experts'. 

"There’s no doubt the market is cooling due to a reduced level of market activity on the side of the nation’s buyers, but given the turbulent economic times of late, today’s figures can be viewed as extremely positive.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "This most comprehensive of all the house price indices provide an interesting snapshot of market activity as it also includes cash buyers who have proved so crucial lately now mortgages are so much harder to come by on competitive terms.

"However, the figures are a little dated so don’t yet show how some buyers and sellers are slowly emerging from the quieter-than-usual summer period taking heart from an expectation that base rates may be at or close to their peak. Today’s surprise drop in inflation won’t do any harm to that sentiment either."

Iain McKenzie, CEO of The Guild of Property Professionals, comments: “Despite gloomy predictions, house price growth is still positive, and good news on inflation means that the market can be optimistic about autumn.

“Sellers may worry about the value of their home, but it’s important to remember that it‘s still worth much more than it was prior to the pandemic.

“Continuing buyer demand is helping hold up the market and keeping property prices buoyant in the face of challenging conditions.

“Today’s inflation figures will add to downward pressure on mortgage rates, offering a welcome respite to first-time buyers and those nearing the end of fixed deals.

“Autumn is typically a busy season for estate agents, and there’s a few glimmers of hope that the end of the year will see the market turn.”

Ben Waugh, Managing Director at more2life, said: “As the ongoing cost of living crisis squeezes borrower incomes, it’s not hugely surprising that activity in the mortgage market is slowing down. The UK housing market is resilient enough to stay the course in choppy waters, but the consecutive increases in the base rate have created downward pressure on prices, although they are higher than this time last year.

“For older borrowers facing increasing mortgage repayments ahead of retirement, the current economic turmoil may provide a reasonable motivation to reassess their financial options. Times are challenging, especially for those who are considering whether their pension will be enough to support them. For the over-55s, seeking expert independent advice could offer actionable solutions and more importantly, some much-deserved peace of mind.”

Anna Clare Harper, CEO of sustainable investment adviser GreenResi, says: "The most obvious and immediate cause of this slowdown in growth is higher interest rates, which make buying and owning property less affordable regardless of house prices.

"2 million property owners face two to three times their previous housing costs by the end of 2023 due to variable rates rising or fixed rate terms coming to an end. These stressed property owners are often seeking a fast sale; and investors we work with are able to negotiate attractive deals, which might be 20-30% lower in price than this time last year.

"However, house prices are not expected to tank, since the vast proportion of homes are owned outright by households with ‘housing privilege’. Outright home ownership with no mortgage is the largest - and luckiest - group of property owners. 8.8 million (36%) homes in England are owned outright, and they are unaffected by mortgage interest rates. For this reason, fears of a ‘house price crash’ are unrealistic."

Jean Jameson, Chief Sales Officer at Foxtons, said: “While the market backdrop remains challenging, slightly cooling ONS inflation figures and a growing consensus that the Bank of England has neared the top of its base rate increases has brought some needed respite.

"Properties with more competitive pricing are still stimulating buyer demand and, for Foxtons, deals agreed in July were the highest they have been over the past 5 years. This indicates that London property remains an attractive option for many and that buyers and sellers are opting for established real estate agencies to support with transactions in this market.”

Emma Cox, MD of Real Estate at Shawbrook, said: “While all eyes will be on the Bank of England’s base rate decision tomorrow, the latest house price data gives reason to be optimistic for the UK property market.

“Buyer demand has seen a positive increase, pushing up asking prices as sellers become more confident to list. And while competition is increasing, opportunities in the rental market are still there for professional landlords seeking to acquire quality property and fulfil ongoing demand.

"With potentially lucrative financial benefits, landlords may also consider investing in houses in multiple occupation (HMOs) to diversify their portfolio and maximise rental yield."

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