Average house price annual inflation fell to 2.2% in the 12 months to July 2024, down from the revised estimate of 2.7% in the 12 months to June, according to figures from the Office for National Statistics (ONS) latest House Price Index.
The average house price was £290,000 in July, £6,000 higher than it was 12 months ago.
Average house prices in the 12 months to July increased in England by 1.6% to £306,000, increased in Wales by 2.0% to £218,000 and increased in Scotland by 6.0% to £199,000.
The average house price increased in the year to Q2 (April to June) to £185,000 in Northern Ireland (6.4%).
On a non-seasonally adjusted basis, average house prices increased more slowly between June 2024 and July 2024 at 0.6% when compared to the same period 12 months ago at 1.1%.
On a seasonally adjusted basis, average house prices in the decreased by 0.4% between June 2024 and July 2024.
Of English regions, annual house price inflation was highest in the North East, where prices increased by 3.8% in the 12 months to July 2024.
London was the English region with the lowest annual inflation, where prices decreased by 0.4% in the 12 months to July 2024.
In terms of the rental market, average private rents increased by 8.4% in the 12 months to August, down from 8.6% in the 12 months to July 2024.
Average rents increased by 8.5% to £1,327 in England, 8.5% to £752 in Wales, and 7.6% to £969 in Scotland.
In Northern Ireland, average rents increased by 9.9% in the 12 months to June 2024.
In England, rental inflation was highest in London at 9.6% and lowest in the South West at 6.4%.
Reaction:
Richard Harrison, head of mortgages at Atom bank:
“There is clear momentum building in the housing market currently.
“The first base rate cut in four years has helped spark activity and a bit of competition among lenders, bringing back prospective buyers who might have put deals on hold.
“For example, Rightmove has suggested that the number of interested buyers contacting estate agents is up by 19% compared with a year ago.
“Lower mortgage rates are undoubtedly playing a part here, and while another base rate cut this week looks unlikely, the markets seem to expect another cut before the end of the year, spelling more good news for potential buyers.
“Moneyfacts data shows that average interest rates for two- and five-year fixed rates have fallen for two straight months, a trend that borrowers will hope to see continue.
“September marks the two-year anniversary of the ill-fated mini-Budget, an excellent reminder of the devastating impact the political world can have on mortgage rates and the housing market.
“With the Budget due next month, I hope the new Government is thinking carefully about how it can positively shape the prospects for homebuyers and homeowners in the years ahead, particularly first-time buyers.
“The housing ladder can only function if people are able to get onto that first rung.”
Nathan Emerson CEO at Propertymark:
“It is reassuring to see further progress within the housing market as we continue to witness a consistent trend of growth as the year plays out.
“Overall, 2024 has proven to be transformative for the housing market with it facing a myriad of challenges at the start of the year and gathering pace to a far more upbeat performance as demonstrated by these latest figures.
“Propertymark remains keen to see the UK Government kick start their house building programme to alleviate current pressures on housing demand and there is also a massive interest from those who aspire to buy to see and understand what support may be offered to boost their ability to get a footing on the housing ladder.”
Mark Harris, chief executive of SPF Private Clients:
“With inflation sticking at 2.2% and expected to edge up in the autumn, it’s unlikely this will trigger a further rate cut from the Bank of England this month, although the markets still expect at least one further rate reduction before the end of the year.
“The good news for borrowers is that mortgage rates continue to soften, with Santander introducing a sub-4% 2-year fix on the back of the lowest 2-year swap rates in two years.
“There are also plenty of 5-year fixes at sub-4% for those looking for certainty over a longer period.
“While rock-bottom rates have long gone, these reductions are giving borrowers some comfort after a prolonged period of rising rates.
“Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“Most properties are getting a good number of viewings but pricing is very important.
“Well-priced properties sell, everything else sits on the market, goes stale and ultimately will achieve less than it could have realised if the price had been more realistic in the first place.
“We achieved over asking price on two houses this week alone, and have another house that after just a 2% price reduction, received an offer at the new asking price.
“This isn’t a market where buyers are coming in with big offers, there are some exceptions to this but most people want to see properties that are reasonably priced and not waste their time.
“In a rising market, you can ask a high price and know applicants will view and offer but a flat market is very different.
“It looks unlikely that the Bank of England will cut rates this month but a November rate cut, while too late to impact the housing market this year, will help kickstart the 2025 market.”
Alex Upton, managing director, specialist mortgages at Hampshire Trust Bank:
“Rents have continued to rise sharply, reflecting the ongoing shifts in the rental market landscape.
“With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing.
“As the Royal Institution of Chartered Surveyors (RICS) has noted, while more landlords are bringing properties to market, tenant demand is still outstripping supply.
“This imbalance is likely to push rents higher as we move forward.
“Rather than a mass exodus, what we’re seeing is a refinement of strategy among professional landlords who are keen to adapt to the evolving market.
“There’s growing interest in more specialist, higher-yielding investments—such as houses in multiple occupation (HMOs) or semi-commercial properties—that can provide a better return on investment.
“Landlords are looking for ways to diversify and strengthen their portfolios, and they’re increasingly open to exploring different property types to achieve that.
“With the Autumn Budget approaching, there’s a lot of speculation about potential changes that could affect landlords.
“I’d like to see a focus on positive measures that encourage continued investment in quality rental housing and support the professional landlords who are committed to providing high-standard homes.
“The private rental sector is crucial to meeting housing demand, and it’s essential that we don’t lose sight of that.”
Josh Skelding, commercial director at Fignum:
“The usual autumn uptick in activity seems to have arrived ahead of schedule, with today’s data showing house prices moving upwards.
“Thanks to falling mortgage rates, both buyers and sellers are becoming more active, boosting demand and gradually pushing house prices up.
“If interest rates are cut again in the coming months, we’ll only see further gains in the market, helping to keep house prices on a positive trajectory.
“That said, a few challenges need to be addressed first which could dampen demand. With energy costs set to jump 10% next month and the October Budget bringing possible tax increases, consumers may hit pause to reassess their buying plans.
“Landlords, in particular, could be discouraged from growing their portfolios with capital gains tax expected to increase.
“As these changes impact affordability, lenders need to invest in innovation to stay on the front foot and support borrowers.
“By investing in the right technology, like cloud-based SaaS solutions, lenders can stay agile with real-time pricing, giving buyers the best chance to find a product that fits their financial needs.”
Ed Phillips, Lomond CEO:
“The property market continues to show strong signs of improvement and we’ve now seen six consecutive months of positive house price growth materialise over the course of the year, as well as the fifth consecutive of annual growth.
“Whilst interest rates remain far higher than today’s homebuyers have become accustomed to, the first base rate reduction in over four years has only helped to boost buyer confidence and this is likely to continue with yet further cuts anticipated before the year is out.”
Marc von Grundherr, director of Benham and Reeves:
“Autumn may be fast approaching, but property market prosperity continues to blossom and we’ve seen the level of buyer enquiries, offers made and sales agreed all start to normalise following a prolonged period of stagnation.
“The nation’s homebuyers may be waiting with bated breath in hopes of further incentivisation in the Autumn Statement, however, this is unlikely to materialise.
“Our new Government has been ambitious in its immediate intentions to build more homes, but beyond this usual rhetoric, focus seems very much on penalising landlords to help boost the Treasuries coffers, rather than helping homebuyers onto the ladder.”
Verona Frankish, CEO of Yopa:
“The UK property market has built up a real head of steam so far this year we’re now seeing consistent levels of monthly and annual house price growth, which demonstrates that buyers are not only returning to the market, but they are doing so with greater confidence.
“It’s also important to note that these latest figures are for July and so the boost to market sentiment that has come following August’s interest rate reduction is yet to be reported.
“With another base rate reduction widely expected to materialise tomorrow, the outlook is very positive indeed and we expected 2024 to be a far more positive year compared, as a result.”
Aman Bajwa, co-founder and director of Fairbridge Capital:
“Today’s figures reveal that the property market has shrugged off the summer lull, and is showing no signs of slowing down, as we enter what is traditionally a busier period.
“Investors are getting back into the property market as interest rates fall, with several sub-4% 5-year mortgage deals now available.
“This, paired with lower inflation, is fueling demand.
“With rents increasing faster than house prices, and rumours that the base rate could hit 4.5% before the end of the year, activity shows no signs of stopping either.
“Landlords who haven’t expanded their businesses over the turmoil of recent years are re-entering the market, and new landlords are making their first foray into property investment.
“To maximise opportunities in the buy-to-let (BTL) space, flexibility will remain critical.
“Specialist lenders can help customers get access to finance exactly when they need it, to give them the best chance possible of making a successful investment.”
Nick Leeming, chairman of Jackson-Stops:
“For the first time, house prices are reflecting a cautiously positive afterglow from Labour’s election victory and showing a promising picture for the start of Autumn.
“Post-election stability coupled with the first base rate cut in four years – which has steadied mortgage rates – have renewed buyers’ intent and underpinned stronger house price growth.
“Across the Jackson-Stops network in July, completions were on a par with a year prior and up significantly month-on-month.
“New applicant levels were also a reason to be positive, having increased by nearly a fifth (18%) on an annual basis and rising by 10% month-on-month.
“Yet, the property market knows all too well that calling 2024 the year of recovery would be premature.
“We are now on the cusp of Labour’s first Budget in more than a decade, and expectations are already being managed with difficult decisions on the cards.
“While strengthening the UK’s financial resilience is a clear priority for the new Government, anything that could undermine what has become a positive period of activity in the property market, should be approached with caution and handled with care.
“Buyers’ confidence will always, to varying extents, be influenced by the wider economic picture.
“It is essential the new Government introduces polices to address the supply and demand imbalance, but at a rational rate.
“The market needs consistency and certainty, not knee-jerk reactions and short-term solutions.”
Kevin Roberts, managing director, Legal & General Mortgage Services:
“The property market isn’t showing any signs of a summer hangover, with falling mortgage rates – as low as 3.77% for a 5-year fixed deal and the first sub 4% 2-year fix now being available, all helping to maintain momentum.
“Today’s announcement of a fifth consecutive increase in annual house prices speaks to a market that is dynamic.
“Following the recent base rate cut, some experts are predicting a further boost in market activity and October is set to be a key month for remortgaging too, meaning it’s not just prospective buyers who will be behind growing activity in the mortgage market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The market is baring its teeth once more, demonstrating considerable resilience as these figures, unlike others, reflect cash and mortgage transactions in the build-up to the election when we would have expected economic worries to have compromised prices.
“Since then, falling mortgage rates, steadier inflation and more political certainty have helped to release pent-up demand and supply.
“Looking forward, we do not anticipate prices will pick up sharply as the improved choice and concerns, particularly among higher-end buyers and sellers, mean caution is prevailing.”
Gareth Lewis, managing director of specialist lender MT Finance:
“Property prices are rising because there aren’t enough sales transactions. Those buyers that are going ahead are paying a higher premium because there is still less stock available.
“However, agents report seeing an increase in activity.
“Whether that will mean more stock coming on and therefore more of a buyers’ market and flatter from a pricing point of view, only time will tell.
“People are waiting and seeing what the Budget has in store, mindful of some of the pledges Labour have made.
“However, the Government should be mindful that it still needs the property market to be functioning and ultimately that comes from more stock and more transactions.
“Some stimulation is essential to encourage more people to move.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“Another month of positive annual growth tempered by a modest fall in month-on-month figures will receive a mixed reception among estate agents and home-sellers.
“Affordability concerns and a shortage of housing in some areas of the country are still an obstacle for prospective buyers, but the sense of stability we are seeing is good news for sellers and is allowing lenders to be more generous with mortgage offers.
“It still looks likely that house prices will remain stable for the rest of the year, though it won’t be until the Budget that we get an idea of how they will shape up for 2025.
“We would like to see some incentives to buy in the Budget.
“Alternatively, a clear strategy for building new homes and spelling out what they are going to do to support young first-time buyers struggling to save for a deposit.
“The property industry is at a crossroads and the next few months will be critical.
“If Government decision-making is strategic and practical, any signs of volatility would be appeased.”
Nicky Stevenson, managing director at Fine & Country:
“The economy may have flatlined in July, but the property market is showing resilience in the face of ongoing challenges and is still showing healthy levels of annual growth.
“This divergence highlights the complexity of the current economic landscape.
“Recent indicators present a mixed picture. On one hand, GDP growth has stalled, suggesting a potential slowdown in economic activity.
“Meanwhile, inflation has stayed close to the government’s 2% target, with today’s data showing it held steady at 2.2% in August.
“Economists maintain a cautiously optimistic outlook on inflation trends.
“Although they anticipate a rise in inflation during the latter half of 2024, they expect it to ease again and approach the 2% target by early next year.
“More positively, the Bank of England made the first cut to interest rates in more than four years in August.
“This drop was a significant move, making borrowing more affordable and potentially stimulating housing market activity.
“Experts predict that we could see a further drop in the base rate later this year, although this remains contingent on inflation trends and other economic factors.
“The October budget will be another key moment to watch, with potential tax rises being discussed as a means to manage public finances.
“If introduced, these could affect consumer spending power and add pressure to households.
“Broader economic indicators paint a mixed picture. Growth is stagnant, inflation is steady, and potential tax changes loom.
“However, the housing market remains robust, and recent mortgage rate cuts hint at a positive shift ahead.
“These factors will play a key role in shaping the economic outlook in the coming months.”
