Low mortgage rates and a continuing shortage of properties helped push house prices up by 1.1% between July and August, according to Halifax’s latest House Price Index.
The bank said that the average price of a home in the UK has now reached £222,293, with prices in the last three months up 0.1% compared to the previous quarter. The current average property price in the UK is now just above the previous high of £222,190, reached in December 2016.
The annual rate of growth increased from 2.1% to 2.6% in August, Halifax said, with property sales exceeding 100,000 for the seventh month in a row.
However, Nationwide’s latest house price index, which calculates figures in a different way to Halifax, showed a contrasting picture. The building society said that annual house price growth slowed to 2.1% in August, down from 2.9% in July.
Although the unemployment rate fell to 4.4% in June, its lowest level for more than forty years, mounting pressure on household finances due to high living costs may have contributed to lower house price growth.
Robert Gardner, Nationwide's Chief Economist, said “In some respects the slowdown in the housing market is surprising, given the ongoing strength of the labour market.
“It may be that mounting pressure on household finances is exerting a drag. Wages have been failing to keep up with the cost of living in recent months and consumer sentiment has weakened.”
However, a limited supply of properties is likely to support prices going forward, both Halifax and Nationwide said. According to the Royal Institution of Chartered Surveyors’ (RICS) latest monthly report, new instructions for home sales fell for the 17th consecutive month in July, whilst the average stock levels on estate agents’ books are close to an all-time low. As a result, Nationwide expects prices to rise by around 2% over 2017 as a whole.
Limited supply supports house prices