The value of the average home increased by 0.6% in July to £217,010 according to the latest Nationwide house price index, which the mutual described as a “modest rebound”.
As a result, house prices are up by 2.5% on an annual basis, increasing from 2% last month.
Robert Gardner, chief economist at Nationwide, noted that annual house price growth has sat within the 2-3% range for the past 12 months, which he said suggests there has been little change in the balance between supply and demand in the housing market.
He continued: “Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
“Overall, we continue to expect house prices to rise by around 1% over the course of 2018.
Enjoying the sun rather than viewing properties
Sam Mitchell, chief executive officer of online estate agent Housesimple.com, noted that we are now into the traditionally quiet summer period for the housing market, with many would-be buyers opting to enjoy the excellent recent weather rather than attend viewings.
He added: “Buyer and seller activity is likely to pick-up significantly in a month or so. September is generally a very busy period for the housing market, and sets the tone for the rest of the year.”
Family support can’t overcome the lack of affordable housing
Kevin Roberts, director of Legal & General Mortgage Club, noted that millennials need to find up to 13 times their annual salary in order to buy in London, and argued that while support schemes like Help to Buy and shared ownership, as well as support from their families, will help it isn’t enough.
He continued: “Last week the Institute of Economic Affairs offered £50,000 for the best essay on how to resolve the housing crisis – we firmly believe the answer is building more affordable homes.
“The Government has already shown a commitment deliver on the thousands of new houses and flats the country needs, we just need to see action on that promise if future generations are to have the best chance of taking their first step.”
What difference will a base rate change make?
Ishaan Malhi, chief executive officer of online mortgage broker Trussle, noted that prices are continuing to rise faster than wages, leaving homeownership seemingly out of reach for many.
He added that an interest rate rise this week could also dent the chances of would-be buyers.
Malhi said: “If rates are to rise, this should have a downward impact on property prices in the long-run, but first-time buyers will suffer the effects of incomes being squeezed and loan rates increasing, making it harder for them to get a mortgage in the short-term.”
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