UK house prices rebound in July
08-04-2015
Brits have gone house hunting again, judging from the latest Nationwide house index, which shows a rise in prices for July.
Prices climbed by 0.4 per cent in July, from a monthly decline of 0.2 per cent in June. The rise was in line with economists' expectations.
The annual pace of house price rises now stands at 3.5 per cent, up 3.3 per cent in June, again in line with expectations.
Robert Gardner, Nationwide's chief economist, said:
After moderating over the past twelve months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%.
This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand.
Nationwide added that changes to the way house purchases are taxed has "reduced 'bunching' at key price points." (See its chart below.)
The changes mean buyers face a smoother step-up in tax after breaching set prices.
It says:
The slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds.
Even though the change only came into effect six months ago, the impact on the pattern of transactions is already evident, with much less bunching of transactions around the £125,000, £500,000 and in particular the £250,000 price points.
The benefits are greatest in the South of England where average house prices are higher. We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England.
