House price growth flat over June and now up a reduced 6.4% over 12 months

28th July 2014

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House prices in England and Wales have cooled off during the hot summer with numbers from the Land Registry showing no movement between May and June.

This followed increases of 0.3% month-on-month in May and 1.2% in April. As a result the latest stats from the Land Registry, which are based on completed transactions, show that the annual rise has moderated to 6.4% in June after rising to 6.7% in May, from 6.4% in April and 5.8% in March.

London showed signs of losing momentum, as they rose just 0.1% month-on-month, causing annual house price inflation in the capital to moderate to 16.4%, from 17.8% in May.

Howard Archer, chief UK and European economist at IHS Global Insight said: “The Land Registry data for June suggest that house prices have temporarily at least lost momentum amid a recent cooling in activity which has been influenced by the introduction of new regulations under the Mortgage Market Review (MMR).

“Admittedly, data from the British Bankers Association indicates that mortgage approvals picked up to a limited extent in June but they remained below the peak levels seen earlier this year.”

Significantly, Archer noted, there is evidence in recent surveys that buyer interest has recently come off its highs. He highlighted Hometrack’s latest survey which reported that demand for housing fell slightly in July and that there is a growing element of caution from buyers about the market outlook as the prospect of future interest rate rises looms.

In addition, the latest RICS survey reported that its new buyer enquiries balance in June was at the lowest level since the beginning of 2013.

Furthermore, a survey released in late-July by the Halifax indicated that people have become much warier about buying a house.

“While house prices will highly likely keep on rising over the coming months, it is probable that the gains will be more restrained compared to the recent peak levels,” said Archer.

For his part, Archer currently expects house prices to rise by around 6% overall in 2015.

“Slowly rising interest rates, more stretched affordability ratios, due to the marked rise in house prices, and tighter mortgage lending as a consequence of the MMR and the Bank of England’s macroprudential measures announced in June are seen having some restraint on the housing market in 2015,” he added.

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