UK housing market recovers from slowdown as prices jump 2.6% in August

House prices and rents are set to rise further in 2017, underpinned by a supply shortageReuters

The slowdown in Britain's housing market could be coming to an end, as UK house prices rose 0.1% between June and August compared to the preceding three months, marking the first quarterly increase since March.

According to data released by Halifax on Tuesday (7 August), prices in the three months to August were 2.6% higher than in the corresponding period a year earlier, to £222,293, which is just above the previous high of £222,190 recorded in December last year.

While the annual rate of growth in August was higher than the 2.1% recorded in July, which was the lowest annual rate since the 2% recorded in April 2013, it remained well below the 10% peak it reached in March 2016 when transactions grew sharply ahead of the introduction of new higher stamp duty tax rates for buy to let and second homes that came into effect in April.

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Meanwhile, on a monthly basis, house prices rose by 1.1% between July and August, following a 0.7% increase in the previous month.

"Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low," said Russell Galley, Managing Director at Halifax Community Bank.

"However, 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.

"House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months."

The ongoing shortage of available properties continued to prop up the market, with instructions for home sales falling for the 17th consecutive month in July, while, according to the Royal Institution of Chartered Surveyors' monthly report, the average stock levels on estate agents' books are close to an all-time low.

Meanwhile, home sales between June and July edged up to 104,760, the highest monthly level since March 2016, and sales have now exceeded the 100,000 threshold for the seventh month in succession. Halifax added that in the three months to July activity was 10% higher than in the same period last year.

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