The Nationwide House Price Index released this morning has revealed that house prices grew by 0.3% month on month in July.
Following the release of this data, industry experts have shared their thoughts with IFA Magazine.
Matt Thompson, head of sales at Chestertons, says: “Despite some uncertainty over the Bank of England’s decision to cut interest rates today, July’s property market still saw an increase in buyer activity. This return of buyer confidence was not only boosted by the General Election results but also by some lenders introducing more attractive mortgage products with sub-4% rates.”
Michelle Stevens, mortgage expert at personal finance comparison site finder.com said: “The UK property market has started to see some glimmers of hope over the last month, with mortgage providers finally beginning to compete when it comes to lowering rates, thanks to expectations of an upcoming base rate cut. Just last week we saw Nationwide introduce the first sub-4% mortgage rate since February, and many are hopeful this could be a sign that the market is about to heat up again. If the Bank of England follows through with expectations and lowers the base rate in the next couple of months, I’m confident that house prices will continue to see growth in the second half of this year. In fact, we recently polled a panel of experts, and 70% believe that house prices will rise by up to 2.5% by the end of this year.
Holly Tomlinson, financial planner at Quilter: “This morning’s house price index from Nationwide suggests that the property market has regained some degree of consistency, with another small uptick in house prices reported in June. UK house prices rose 0.3% month on month in July with the annual growth rate picking up to 2.1%, from 1.5% in June. This marks fastest pace of growth since December 2022.
“With the economic outlook looking more predictable, both buyers and sellers who have been treading water for the past few months are now re-entering the market and buoying prices.
“Later today, the Bank of England (BoE) is set to decide on whether to hold or cut its base rate, which will further influence the housing market’s dynamics. The BoE’s decision remains on a knife edge; a cut in rates or even a signal that a cut is on the near horizon will help mortgage rates fall further increasing confidence.
“Now inflation has returned to the Bank of England’s target rate of 2%, a rate cutting cycle should start in the not-too-distant future. This should bolster the housing market as prospective buyers become more willing to purchase a property in a stable or dropping interest rate environment.
“The monthly property transactions data for June which was released yesterday by HMRC paints a less rosy picture, as property purchases were marginally lower than in May, decreasing to 91,370 on a seasonally adjusted basis.
“The government’s plans to increase the supply of newly built homes may also eventually stabilise house prices. A larger supply of homes will better soak up the significant demand in the UK, which serves to push prices ever higher. However, even if Labour succeeds in its plans to build 300,000 new homes a year, it will still take some time before any impact is reflected across the property market.
“Similarly, affordability remains a significant challenge. Even if prices stabilize, they are still far out of reach for most first-time buyers who have seen house prices rise far quicker than their pay packets, keeping that first rung of the property ladder just out of reach.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “July’s house price rise could mark a turning point for the property market and if interest rates drop today, optimists will be expecting a property boom in the latter half of 2024.
“This marks the fastest pace of growth since December 2022 and suggests renewed confidence in the housing sector and hopefully the start of a more stable period.
“It comes at a time when the broader economic picture is improving. Inflation has been held steady at the Bank of England’s target rate of 2%, meaning that measures taken to control rising prices are working.
“A rate cut by the Bank of England could be a potential game-changer for the property market. Lower interest rates typically translate into more affordable mortgages and we’re already seeing lenders respond with more competitive deals ahead of the decision later today.
“With the combination of rising house prices, stabilised inflation, and potentially lower interest rates, this could lead to a flurry of activity in the coming months – with more properties coming to market and a potential boost in transactions.
“But while these factors may fuel increased activity, the full effects will take time to unfold. Increased housing supply and ongoing affordability pressures will act as a counterbalance, and help to ensure that any market growth remains sustainable in the long term.”
Sam Mitchell, CEO, Purplebricks said: “Confidence flooded back into the housing market in July, particularly in the second half of the month. We have seen increases in viewings and offer activity following the outcome of the General Election and the end of the Euros as buyers look to get on with moves they had put on pause. As a result, house prices are rising. Banks have been competing more on rates and there were some mortgage offers being issued in record time this month. This benefits first-time-buyers especially as they look to leave the private rented sector or family homes. Greater accessibility to homeownership will reduce pressure on private renting and hopefully mean lower rents across the country in an increasingly challenging environment.”
