House prices rose by an annual 2.3%, the biggest yearly rise since January
British house prices rose by the most six months in July, according to figures published on Wednesday by mortgage lender Halifax that suggested fresh momentum in the property market.
House prices rose by an annual 2.3%, the biggest yearly rise since January. The last time prices increased by more on an annual basis was February 2023, when they increased by 2.5%.
On a monthly basis, prices climbed by 0.8% in July from June, Halifax said.
The Labour Party, which secured a landslide win in last month’s parliamentary election, has promised to reform Britain’s planning system and has set out mandatory targets to speed up home-building, but the shortage of supply is likely to remain a factor driving house prices for the medium term.
Moreover, last week the BoE reduced rates to 5% from a 16-year high of 5.25%, its first cut since March 2020.
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, according to Amanda Bryden, Halifax’s head of mortgages.
However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners, she added.
Other gauges of the housing market have also shown momentum increasing.
Last week, rival mortgage lender Nationwide said its measure of house prices increased by 2.1% in the 12 months to July, the biggest annual increase since December 2022.
Mortgage rates soared when then Prime Minister Liz Truss’ economic plan caused a bond market slump in September 2022. Borrowing costs have since largely steadied, although they remain almost double their level before the turmoil and an increase in benchmark interest rates.
Investors are currently putting a nearly 33% probability on the Bank of England reducing the bank rate by another quarter point at its next meeting in September.