According to data released on Wednesday by mortgage lender Halifax, the price of a home in Britain increased for the longest period in July. These figures suggested that the property market was gaining steam.
The largest annual increase in house prices since January occurred, with a 2.3% annual increase. Prices increased by 2.5% every year in February 2023, which was the last time they did so.
According to Halifax, prices increased by 0.8% monthly in July over June. The majority of Reuters-surveyed economists had predicted a 0.3% monthly increase.
Although the Labour Party, which won the parliamentary election last month with a landslide, has promised to speed up home construction and reform Britain’s planning system, the scarcity of housing will probably continue to drive up housing costs in the medium run.
In addition, the Bank of England reduced rates last week for the first time since March 2020, going from a 16-year high of 5.25% to 5%.
“Against the backdrop of lower mortgage rates and potential further Base Rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, Halifax’s head of mortgages, said.
“However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners.”
There has also been an increase in momentum in other housing market indicators.
The biggest annual increase since December 2022 was reported by competitor mortgage lender Nationwide last week, which stated that its index of home prices increased by 2.1% in the year ending in July.
When the bond market collapsed in September 2022 due to then-prime minister Liz Truss’s economic plan, mortgage rates shot through the roof. Since then, borrowing costs have mostly stabilized, but they are still almost twice as high as they were before the unrest and an increase in benchmark interest rates.
At the moment, investors are placing a roughly 33% chance on the BoE cutting the Bank Rate by another quarter point at its September meeting.
