- House prices rose 0.8% in a July – up from a fall of 0.2% in June.
- They’re up 2.3% in a year – the strongest growth since January.
- The average house now costs £291,268 – up £2,226 in a month.
- The North West saw the strongest growth in England – up 4.1%, while prices in Eastern England dropped 0.4% (the only region to show falls).
Halifax has published its house price index for July: july-2024-halifax-house-price-index.pdf
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“After a bit of a washout for the property market earlier this summer, the sun finally came out in July. This could be a sign of things to come, because the interest rate cut this month could help warm buyers up for a hotter autumn.
July’s price growth came alongside a slight easing in mortgage rates, as the market priced in an August rate cut. The cut came on cue, and is likely to mean modest price growth through the rest of 2024. However, it’s not going to be a patch on the boom of recent years.
Buyer sentiment is likely to pick up on the back of the rate cut. Buying in a market with falling rates feels more comfortable, so it’s likely to encourage more people back to the market. Since the start of the year, sellers have been increasingly lining up to part with their home, so there’s a decent chance this will translate into sales and price rises.
However, there’s going to be a lid on price rises. It’s worth keeping an eye on buy-to-let investors, who will be getting increasingly alarmed by speculation over capital gains tax rises. If Rachel Reeves boosts the CGT rate to match income tax, a higher-rate taxpayer would see their tax bill rise by two thirds when they come to sell. There will be property investors who decide it’s not worth this risk, and will sell up before any potential change comes in. If there are too many of them, it could create a glut of property for sale and keep prices down.
Meanwhile, affordability is still an issue. House prices have held up, and mortgage rates remain fairly high, which has pushed people out of the market. And while the Bank of England rate cut will make people feel better about buying, it’s not going to have a massive immediate impact on mortgage deals.
Tracker rates move immediately with the Bank of England, but this is only a quarter point cut, and we’re only expecting one more in 2024. Fixed-rate mortgages, meanwhile, look ahead to future rates. The Bank is modelling very gradual cuts in the coming years, and by the middle of 2026, it says the bank rate may still be at 4%. This has largely been priced in. So while fixed rates should come down gradually over time, we’re not expecting dramatic movements.
The key to affordability for first time buyers is the size of the deposit, so it’s worth getting all the help you can. If you’re aged 18-39 this could include a Lifetime ISA. You can put up to £4,000 a year into it and the government will top it up by £1,000. Given that a 10% deposit is now £29,126, steady investment in a LISA over the years means you could get almost £6,000 of free money from the government towards the price of your new home.”
