Housing market starting to cool

Is this the start of the housing market slowdown?

The latest survey from mortgage lender Halifax shows average house prices growing, but at their slowest pace since March.

Despite annual growth of 7.6% in July, average house prices rose by 0.4% in a month.

It means the average house price now stands at £261,221, which is slightly below their peak in May of £261,642.

The latest figures mean that average house prices have risen by £18,500 in a year.

While Halifax acknowledged the housing market is showing signs of cooling, following the end of the stamp duty holiday in June, it is not forecasting any price falls for the remainder of 2021.

Halifax assesses the housing market as ‘solid’ as the UK economy recovers from the pandemic.

There’s a difference in the data shared by Halifax and Nationwide, with the latter reporting a 0.5% fall in house prices between June and July.

However, the Nationwide data showed annual growth at a more robust rate than Halifax, at 10.5%.

Russell Galley, managing director at Halifax, said:

“This easing was somewhat expected given the strength of price inflation seen last summer, as the market began its recovery from the first lockdown, and with activity supported by the start of the stamp duty holiday.”

“Although there remains some uncertainty over the impact on employment from the unwinding of Government support schemes, on balance the risks to the macro-environment are receding, with consumer confidence improving, the labour market recovering, and the economy expanding as restrictions are lifted.

“Overall, assuming a continuation of recent economic trends, we expect the housing market to remain solid over the next few months, with annual price growth continuing to slow but remaining well into positive territory by the end of the year.”

Looking forward, Halifax believes that a lack of supply in the housing market will continue to support rising prices. Galley said:

“Latest industry figures show instructions for sale are falling and estate agents are experiencing a drop in their available stock.

“This general lack of supply should help to support prices in the near-term, as will the exceptionally low cost of borrowing and continued strong customer demand.”