UK house prices down by 1% month on month, too early to judge Brexit effect

House prices in the UK fell by 1% between June and July, taking the average price to £214,678, according to the latest index which also shows that overall growth is slowing. In the three months to July prices were 1.6% higher than in the preceding three months, above June’s 1.1% increase and similar to the rates recorded in April and May of 1.5% but it significantly lower than in February and March. The data from leading lender the Halifax, also shows that prices in the three months to July were 8.4% higher than in the same three months a year earlier, unchanged from June but the lowest since July 2015 when it was 7.8%. The month on month decline largely offset the 1.2% increase in June, but Martin Ellis, Halifax housing economist pointed out that month on month changes can be erratic and monthly falls often occur within an upward trend. He explained that it was the third monthly fall so far this year and was smaller than February’s decline of 1.5% and the quarter on quarter change is a more reliable indicator of the underlying trend. The number of first time buyers increased by an estimated 10% in the first six months of 2016 compared with the same period in 2015, according to the Halifax First Time Buyer Review. There were an estimated 154,200 first time buyers in the first half of 2016 compared with 140,500 in the same period last year. This was more than double the market low in the first half of 2009 when it was 72,700. Nonetheless, the number of first time buyers in the first half of 2016 was nearly a fifth lower than in 2006. ‘There are signs that house price growth is slowing with a deceleration in both the annual and quarterly rates of increase in the past few months. Nonetheless, the current rates remain robust. Overall, it remains too early to determine if there has been any impact on the housing market as a result of June’s EU referendum result,’ Ellis added. Alex Gosling, chief executive officer of online estate agents HouseSimple, also believes that too much should not be taken from the monthly figure. ‘There are so many factors at play right now, we're probably going to have to wait until September to get a clearer picture of how the housing market is coping with this headwind of political and economic uncertainty,’ he said. ‘Property transaction levels traditionally drop off during the summer months,’; he explained, adding that there have been a number of other factors impacting the housing market in recent months such as April stamp duty changes, the EU Referendum, and the cut in interest rates. ‘The Bank of England's decision to cut interest rates yesterday should definitely provide a stabilising effect on the economy. Whether that will be enough to inject the necessary confidence into the property market only time will tell. It will certainly provide a level of confidence… Continue reading

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