UK house prices accelerated at the fastest pace in eight months in July, according to data from Halifax, providing fresh evidence of a modest recovery in the market after a moribund start to the year.
Prices increased 3.3 per cent from a year ago, the lender’s house price index showed, in a rapid pick-up from the 1.8 per cent year-on-year rise in June. Economists have been surprised by the pace of the uptick. The consensus expectation was for a 2.7 per cent rise, according to a poll for Reuters.
Measured quarter-on-quarter, prices rose 1.3 per cent and month-on-month, 1.4 per cent.
The data follow figures from Nationwide published last week, which showed a more modest 0.6 per cent monthly rise and 2.5 per cent annual increase, but which were also characterised as showing a rebound.
Both lenders have questioned the sustainability of the July rise, however. Russell Galley, managing director at Halifax, said on Tuesday that “while the quarterly and annual rates of house price growth have improved, housing activity remains soft”.
He added: “Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer inquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.”
The Halifax index is significantly more volatile than the official data, according to Samuel Tombs, Pantheon Macroeconomics’ chief UK economist. “Month-to-month changes in Halifax’s measure of house prices always should be taken with a large pinch of salt. Most other indicators of house price growth remain weak,” Mr Tombs said.
Combined with the potential for a drag on prices from the recent interest rate rise, slow wage growth and tighter lending conditions, “we doubt that the jump in Halifax’s measure of house prices in July marks a turning point for the market”, he added. Surveyors’ expectations point to a “negligible” increase in house prices over the three months to September.