Statistics office also provides a glimpse of what's happening in the rental market
The average house price in the UK increased by 0.6% to £290,000 in July, but price growth slowed down from 1.9% in the previous month, the latest figures published by the Office for National Statistics (ONS) have shown.
July’s average UK house price was £2,000 higher than 12 months ago, but £2,000 below the recent peak in November 2022.
In the 12 months to July 2023, the house price average increased by 0.6% to £309,000 in England and by 0.1% to £192,000 in Scotland, while it fell by 0.1% to £216,000 in Wales. In the year to the second quarter of 2023, the average house price climbed by 2.7% to £174,000 in Northern Ireland.
The UK House Price Index for July 2023 also revealed that among all English regions, the North East saw the highest annual growth in house prices at 2.7%, while the South West saw the lowest at -1%.
Average UK house prices increased by 0.6% in the 12 months to July 2023 (provisional estimate).
— Office for National Statistics (ONS) (@ONS) September 20, 2023
This is down from a revised 1.9% in June 2023.
➡️ https://t.co/mCUBxzXaYV pic.twitter.com/SoGANBYcYn
“Annual house price inflation, measured using final transaction prices, slowed in July, with negative annual inflation in the South West and London,” said Aimee North, head of housing market indices at the Office for National Statistics.
Jonathan Samuels, chief executive at Octane Capital, commented that not only had house prices remained impervious to the wider economic landscape, inflation had also fallen by a greater degree than expected.
“The Bank of England may well choose to keep the base rate frozen at 5.25% as a result,” he added. “This will be welcome news for the nation’s homebuyers who have already started to benefit from many lenders reducing their fixed rate offerings this week in response to a drop in swap rates.
“Looking forward, further reductions to mortgage rates could be on the cards as the economic picture improves, although it’s too soon to say for sure.”
Tony Hall, head of business development at Saffron for Intermediaries, was not surprised at the house price figures, given the affordability challenges that existed in the market.
“However, the downward trend in house prices is far less significant than some analysts were predicting at the beginning of the year, and recent reductions in mortgage rates could stimulate increased activity in the market in the coming weeks and months,” he said. “Scotland and parts of the North West are also giving us reason to smile, with the housing market in these areas showing notable resilience through a challenging period.
“That being said, with interest rates likely to rise further before the end of the year, affordability will remain a key challenge for those looking to buy, or build, a home.
“The best approach for potential borrowers, particularly those who believe their financial circumstances might traditionally prohibit them from accessing the mortgage market, is to seek independent financial advice to find a product most suited to them.”
Rents up by 5.5% in August
In the UK private rental market, prices paid by tenants rose by 5.5% in the 12 months to August, up from 5.3% in the 12 months to July.
ONS, in its Index of Private Housing Rental Prices report for August 2023, revealed annual private rental price increased in all the UK countries and English regions.
Rents grew by 5.4% in England, by 6.5% in Wales, and by 6% in Scotland. Within England, London had the highest annual percentage growth in private rental prices at 5.9%, while the North East and South West saw the lowest at 4.8%.
“Annual inflation for UK rental prices continues to rise, setting a record high for the 17th month in a row. Wales is seeing the largest annual price growth nationally, while London rents continue their record-breaking surge,” North said.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, confirmed that these rental figures reflected what they had been seeing on the ground.
“Shortage of stock is continuing the upwards pressure on rents at a time when students are adding to tenant numbers,” Leaf pointed out. “The burden of higher mortgage rates, as well as tax and regulatory issues are persuading landlords to quit the sector which is not helping keep rents in affordable territory.
“However, we have noticed the difference between the rents charged on new tenancies and those who are renewing existing arrangements as tenants are reaching an affordability ceiling. Landlords recognise the importance of reliable, long-term tenants rather than maximising their returns unless, of course, their costs are getting out of hand.”
Any thoughts on this latest ONS release of house and private housing rental prices data? Tell us by leaving a comment in the discussion box at the bottom of the page.
