House price boost in August
This marks a rise in the pace of growth, compared to monthly rises of 0.7% and an annual change of 2.1% last month.
The quarterly change in prices was positive for the first time in five months, at 0.1%, as the market showed a return to buoyancy, according to Russell Galley, managing director of Halifax Community Bank. He said the boost was “possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low”.
However, he also warned of continuing downward pressures on prices, adding that “wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers.”
Housing activity up
Rising prices are supported by strong housing activity, with transactions between June and July at their highest level – 104,750 – since March 2016. Transactions have now exceeded 100,000 for the last seven months in a row, according to data from HMRC.
Mortgage approvals for house purchase were also up, growing by 5.2% to 68,700 between June and July, according to the Bank of England, matching the level in January and reversing almost all of the falls seen over the year.
The key indicator that remains low is supply of housing which has fallen for the last 17 months. According to the RICS, the supply of property on estate agents’ books is now close to an all-time low, which should continue to prop up prices, suggested Galley.
He said: “House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”