As would be expected given the trends at a UK level, annual house price inflation is slowing in most nations and regions.
Wales remains the strongest performing area, with annual house price inflation at 11.6% and the only double-digit rise recorded in the UK during August. The South West is also still experiencing strong growth at 9.6%, likely reflecting the ongoing demand for rural living within the region.
Some areas do appear to have headroom for even stronger price growth, with annual house price inflation in the North East now up to 8%. Northern Ireland has also seen prices rise further with annual house price inflation of 9.3% in August, though Scotland has seen price growth slow to 8.4%.
Greater London continues to lag the rest of the country, registering just a 1.3% annual increase in prices in August and, over the latest rolling three-monthly period, was the only region or nation to record a fall in prices (-0.3%). The year-over-year rise in London was also the weakest seen in 18 months. Though at a cost of £508,503, typical properties in the capital remain far above the national average national price.
Russell Galley, Managing Director, Halifax, said: “Average house prices climbed again in August, with the cost of a property increasing by 0.7% or £1,789. Back-to-back monthly price gains have now pushed the cost of a typical home to a record of £262,954, topping the previous high (£261,642) recorded in May this year.
“Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1% (versus 7.6% in July).
However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than £23,600 higher (or +9.9%).
“Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to a year ago. However, while such Government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation.
“We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.
“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”
Anna Clare Harper, CEO of property consultancy SPI Capital, says: "House price growth slowed to 7.1% in August, compared to 7.6% in July, which is not surprising and no bad thing. The boom in house prices has been directly caused by policies around the pandemic, rather than happening despite Covid-19.
"House price growth has slowed due to the tapering down of the temporary stamp duty reduction, which was designed to boost the housing market and confidence through the pandemic. The urgency of lockdown-led upsizing has also eased.
"It’s no bad thing that house price growth is slowing. House prices are still rising faster than most people’s wages. According to Halifax, in August, house prices were £23,600 higher than in June 2020. This is roughly equivalent to median annual incomes in the UK. The annual median PAYE was £23,726 in July 2021.
"A key reason that house price growth exceeds wage growth is the availability and low cost of mortgage finance and the availability of cash. A key consequence is that, for many people, affordability of homeownership is a growing concern. This increases the importance of the rental sector and of investing in it to provide good quality homes for tenants."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ’In one way, record price rises in August are surprising now that the larger discount available from the stamp duty holiday is behind us. On the other hand, these prices are as much to do with stock shortages and cheap mortgage finance as activity. Just as interesting is that the pace of increase is dropping and bears out what we have been seeing in our offices.
"Market strength has not run its course and we are finding pent-up demand is alive and well, resulting in plenty of transactions albeit at a lower level than we saw a few months ago."
