UK house prices grew 0.3% in July

Hometrack house market report

Key Points:

• While overall housing market conditions continue to improve the rate of house price growth slowed in July on softening demand.
• A scarcity of housing for sale has been a key feature of the market in recent months. While supply has been growing it has failed to keep pace with demand. This trend reversed in July with a 2.4% increase in supply on the back of improving market sentiment.  
• House prices grew 0.3% in July, down on the 0.4% growth in each of the previous two months.
• New buyer registrations are slowing as seasonal factors kick in – demand for housing grew 1% in July, down from 1.6% in June and 2.5% in May.
• The coverage of price rises fell marginally over July with 29% of markets registering price increases – down from 31% in June.
• Other market indicators are still improving on the back of continued price rises and rising sales volumes. 
• The average time on the market has fallen to 8.2 weeks - the lowest for 6 years as a result of rapidly shortening sales periods in London (3.8 weeks) and the South East (6.4 weeks). 
• Vendors across the country are benefiting from a lower discount on asking price which currently averages 5.6% - another measure that is back to 2007 levels. Firmer pricing is drawing vendors into the market. 
• Looking ahead we expect demand to continue to slow over the rest of the summer as seasonal factors play their part.  The supply of homes for sale is likely to expand further as vendors look to benefit from improving market conditions and expectations of a renewed pick-up in demand in the autumn. 
• Whether 2013 turns out to be the year with the highest increase in house prices since the start of the downturn will depend on the level to which new buyers enter the market in the autumn. 

Richard Donnell Director of Research at Hometrack - the residential property analysts - said:

“The latest survey shows overall housing market conditions continuing to improve with shortening sales periods and vendors achieving lower discounts on asking price. However, the rate of house price growth slowed slightly in July as a result of weakening demand as we enter the holiday season.

"The momentum generated over the last six months looks set to moderate in the short term with less upward pressure on prices. The year has got off to a strong start. The level to which new buyers enter the market in the autumn will dictate whether 2013 turns out to be the year with the highest increase in house prices since the start of the downturn.

House prices grew by 0.3% in July, down on the 0.4% growth recorded in each of the previous two months. 

"A continued slowdown in the rate at which new buyers are entering the market (up 1% in July) is starting to reduce the upward pressure on house prices. The geographic coverage of price rises also slowed in July with 29% of the country registering price rises and just 1.8% recording price falls.

"London continues to be the engine for overall house price growth with prices in the capital up 0.7% in July, down from a 0.9% increase in June. Across the rest of the country, three regions saw prices remain unchanged in July (East Midlands, Yorkshire & Humberside, North East) while the remainder all registered price increases of up to 0.4% in the South East.

"Despite the modest slowdown in prices in July all the key market indicators continue to improve. The average time on the market has fallen to 8.2 weeks which is the lowest for 6 years thanks to rapidly shortening sales periods in London and the South East. Vendors across the country are benefiting from a lower discount on asking price which currently averages just 5.6% - another measure that is back to 2007 levels."