Average UK house prices kept rising in August, adding more than £1000 in just a month, as fewer properties coming onto the market propped up growth, official figures have shown.
The price of the average UK home rose by 0.5 per cent, or £1180, between July and August to £225,956, slowing down slightly from July’s 0.7 per cent growth.
On an annual basis, price growth accelerated to 5 per cent, with the average property becoming £11,000 more expensive than in August last year, according to the latest house price index by the Office for National Statistics and the Land Registry.
On the rise: House prices kept growing in August, becoming on average £11,000 more expensive than last year
August’s increase is higher than in July, when prices rose by a smaller 4.5 per cent.
Growth was driven by Northern regions, but the London market continued to show signs of a slowdown – with prices in the capital actually falling by 1 per cent on a monthly basis.
The North West saw the biggest annual growth at 6.5 per cent, followed by the South West, East of England and the East Midlands – all of which had a growth rate of 6.4 per cent in the year to August 2017.
The lowest annual growth was in London, where prices increased by 2.6 per cent over the year to £484,362, marking the ninth consecutive month when price growth in the capital has remained below the UK average. The North East, at 3.7 per cent, saw the second slowest growth.
Alex Gosling, chief executive of online estate agents HouseSimple.com noted that August’s surprisingly strong price growth was nevertheless supported by low levels of new properties coming onto the market.
He added: ‘Annual price growth has only ticked up slightly, but it’s noticeable that on a regional level there are pockets of the country which are experiencing mini property booms.’
He noted that some areas like Corby, Wellingborough, and East Northamptonshire, which are neighbours on the map, and have enjoyed some of the highest property price growth of anywhere in the country over the past 12 months.
‘These areas are likely playing catch-up. They may have lagged behind many towns in terms of price growth since 2008, but that now counts in their favour as famillies are moving to these areas because of the affordable property stock and commutable distance to London,’ Gosling added.
‘In London, although price growth is stuttering, trendy Camden and Hackney have bucked the trend. Both boroughs have seen double digit price growth over the past 12 months, more than four times the London average.’
Despite the moderation in house prices over the past year – rates of growth now around half those recorded in mid-2016 – most commentators believe that prices will maintain this pace of growth because of a shortage of homes coming on to the market.
Jonathan Samuels, chief executive of property lender Octane Capital, said: ‘In a now familiar narrative, the lack of supply, low borrowing costs and high employment are propping up prices around the UK despite the level of economic and political uncertainty.’
‘With inflation now at 3% and the first rate rise for a decade potentially not far off, consumers are likely to be even more cautious in the months ahead.’
‘2018 is likely to be a mirror image of 2017, with a hesitant market kept alive by the sheer lack of supply.’
Jeremy Duncombe, director of Legal & General Mortgage Club, added: ‘Annual prices are consistently rising as more buyers chase fewer properties. Escalated by a critical a lack of housing stock, this trend is only set to continue if more affordable housing is not built.’
‘As speculation around the Autumn Budget begins to build up, we hope there will be a genuine answer to boost supply that gives everyone a realistic the chance to own a home.’
Howard Archer, chief economic adviser at EY ITEM Club, also weighed in, saying he expected prices to remain muted over the fourth quarter and then rise a modest 2 per cent to 3 per cent next year.
‘The fundamentals for house buyers are likely to remain challenging over the coming months, with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth,’ he said.
‘Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions.’
The ONS figures lag behind those by Halifax, which reported annual house price inflation at 4 per cent in the three months to September and Nationwide, which reported annual house price inflation slowing down to 2 per cent in September.