- Annual growth slows to 5.5% in July
- East of England is top performing region with 9.3% annual growth
Brexit may well have an impact on the housing market but it’s still too early to tell what that might be. While house price inflation continues to slow on an annual basis, the market has continued to fight back.
Following price falls in March to May, July has seen a modest gain after June’s 0.5% rise, with average prices up 0.2% or £700. Overall, house prices remain £3,386 below their February peak, but £15,422 above their July 2015 levels.
Transaction levels present a similarly complex story. These too have slowed with levels for Q2 2016 20% below the same period last year. However, this has less to do with the referendum vote than the surge in activity to beat the 3% stamp duty surcharge introduced in April on second homes and Buy to Let properties. In fact, the April stamp duty change may also account for much of the apparent slowdown in prices. Prices increased above trend from January to March after the announcement of the change in the Autumn Statement last year. Meanwhile, from April 2016, with the new tax in place, a reduction in the number of higher-valued properties being sold saw a significant reduction in the average price. Price increases since have been slow, but essentially continue to climb at roughly the same rate as before the tax shake-up was announced.
How that trend will be affected by the Brexit vote remains to be seen, but external commentaries and the LSL Acadata HPI data suggest that any slow-down is unlikely to be of the scale suggested by HM Treasury in the run up to the vote. Support for higher prices can be found in the decline in the value of sterling, lower interest rates, and a continued underlying demand and supply imbalance.
Source: LSL/Acadata England & Wales House Price Index, July 2016