The rise in house prices accelerated last month, departing from a recent trend of slowing or steady inflation in the residential housing market, according to the FT house price index, published on Friday.
The cost of the average house in England and Wales rose by 0.7 per cent in June to £222,222 compared with May’s 0.5 per cent rise. The annual increase was 9 per cent, up from 8.7 per cent in May.
Peter Williams, chairman of Acadametrics, the consultancy that produces the FT index, said the change was not large and it was too soon to say whether the monthly increase was a blip or the sign of a longer-term trend.
The two largest lenders, Halifax and Nationwide, painted opposing pictures of the housing market in June. Halifax found price growth slowing but Nationwide‘s survey noted an acceleration.
Mr Williams said: “This modest upward movement runs slightly against the pattern of stability which we have been reporting for some months. With the Nationwide index showing an increase of 1.1 per cent in June and Halifax 0.4 per cent, there is a degree of confusion as to what is really happening in the market.”
The FT index is more comprehensive than the lenders’ data, since it is based on the final sale price of every transaction recorded by the Land Registry. The lenders’ figures are based on agreed prices of a sample of properties needing a mortgage. However, higher interest rates are expected to take their toll on the market. The Bank of England last week raised its rate to 5.75 per cent – the third rise this year and the fifth in 11 months.
“All commentators agree that the market is likely to slow as the year goes on, not least because of negative income growth and of the likelihood of continued increases in interest rates,” said Mr Williams.
Some forward-looking surveys suggest the housing market is beginning to cool.
The Royal Institution of Chartered Surveyors’ survey published earlier this week found the number of properties coming on to the market was outpacing those being sold. It also found a sharp drop in new buyer inquiries, especially in London where affordability is most stretched.
The pace of house price growth in London is still much higher than in other parts of the country. Stripping London out, the FT index showed growth of 7.6 per cent in the year to June in England and Wales, instead of 9 per cent.
The regional figures for May showed that London house prices grew by 1 per cent, easing slightly from April’s 1.2 per cent. Excluding London, regional growth was much slower at 0.3 per cent.
A separate survey, also published on Friday, showed no let-up in the prices people appeared willing to pay for the most exclusive London properties. Knight Frank, the estate agents, said prices of prime central London grew by 3.1 per cent in June, the highest monthly rate of growth since the start of its index in 1976.
The Royal Institution of Chartered Surveyors said higher rates had led to a sharp drop in new buyer enquiries, especially in London where affordability was most stretched.
The FT index showed the gap between London and the rest of the country was still wide. London house prices grew by 1 per cent in May, a slight easing from April’s 1.2 per cent. The annual rate of growth in the capital, averaged over the last three months was 14.5 per cent – well ahead of the 8.8 per cent average for England and Wales.
