It's steady-as-she-goes for the housing market. Prices are barely higher than a year ago as many buyers wait to see what the new Prime Minister has in store.
House prices have edged ahead by just 0.3% during the past year as potential buyers sit on their hands.
The average cost of a UK home stood at £217,663 at the end of July, which was the eighth consecutive month during which the annual rate of growth has been below 1%.
There was a slight uptick in the monthly rate at which prices are rising, with property values increasing by 0.3% during July itself, compared with a rise of only 0.1% in June, according to Nationwide Building Society.
Uncertainty over Brexit is continuing to act as a drag on the market, while promises of changes to stamp duty made by the new Prime Minister when on the campaign trail are also thought to be causing people to delay purchases.
Jeremy Leaf, former residential chairman of the Royal Institution of Chartered Surveyors, said the housing market remained 'in limbo' as potential buyers could be holding out to see what changes are in store.
Why is this happening?
According to Nationwide, the market was presenting mixed data. On the one hand, surveyors have reported a slight increase in buyer enquiries, although consumer confidence still remains low.
On the other hand, property transaction figures point to a further slowdown in the number of homes changing hands.
High employment rates and low borrowing costs are helping to support the market, but the ongoing political uncertainty is acting as a drag on activity.
Who does it affect?
One of the key factors behind the low level of activity is the continued weakness in home-mover activity, according to Nationwide.
It said the number of people currently trading up or down the ladder was running at around half the level seen in 2007.
By contrast, purchases by first-time buyers have almost recovered to pre-crisis norms, thanks in part to a range of government schemes, such as Help to Buy.
One reason for subdued home-mover activity is thought to be the shortage of properties for sale, although Nationwide warned that if people held back from putting their own home on the market, the current situation would become a self-reinforcing trend.
What’s the background?
Going forward, the housing market is expected to remain subdued for the remainder of the year.
Greater certainty about the terms on which the UK will leave the EU, and when and how stamp duty will be reformed should help to boost consumer confidence.
Top 3 takeaways
- House prices have edged ahead by just 0.3% during the past year
- The average cost of a UK home stood at £217,663 at the end of July, the eighth consecutive month during which the annual rate of growth was below 1%
- Property values increasing by 0.3% during July itself, compared with a rise of only 0.1% in June
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