UK property prices rose 7.8% on the year to June, a slowdown from the 12.8% annual rate recorded in May, the Office for National said on Wednesday. Statistics.
However, the slowdown in the growth rate was distorted by “the rise in [house] prices seen in June 2021, which were the result of changes to tax relief,” the ONS noted.
The increase comes despite a recent rise in mortgage costs, following the Bank of England’s decision to raise its key rate from 0.1% in December to 1.75% this month in a bid to curb inflation.
Economists expect further rate hikes this year, which will further increase mortgage repayments. Andrew Sentance, senior adviser at consultancy Cambridge Econometrics, said on Wednesday that the BoE’s key rate may need to rise as much as 4% because policymakers have fallen “behind the curve”.
Prices were also supported by a lack of properties on the market.
The average UK house cost £286,000 in June, £20,000 more than a year ago, according to ONS data.
In England, the average price increased by 7.3% over the year to reach £305,000. Prices rose 8.6% to £213,000 in Wales, 11.6% to £192,000 in Scotland and 9.6% in Northern Ireland to £169,000.
News of rising house prices came as the UK’s inflation rate jumped to 10.1% in July, the first time it recorded a double-digit annual rise in addition four decades.
Jean Jameson, sales director at estate agent Foxtons, said that although London recorded the weakest annual growth of any region in the UK, the capital’s 8.2% increase from July 2021 represented the “biggest change in the annual house price since July 2016”.
“Property prices rose at a faster rate in the London periphery than in central London, rising by 7.7% and 4.7% respectively,” Jameson said. “We could even see a plateau in housing prices in some central London boroughs in the coming months.”
Persimmon, one of the UK’s biggest homebuilders, said in its interim results on Wednesday that it sold homes for an average of £245,597 in the first half of 2022, up 4% from the same period last year. She added that the increase in selling prices mitigated cost inflation.
But sell-through rates for the first seven weeks of the second half were down 11% year-on-year. Speaking during his results presentation, chief executive Dean Finch said it was too early to tell whether this marked a summer lull or a longer-term downtrend.
“In areas where we have control, we are making good progress,” Finch said, but he added that the removal of the government’s purchase assistance program and broader economic pressures presented challenges for the company. next year.
“I think Persimmon will be fine,” he said. “He’ll probably see an adjustment next year, but he’ll come out of it on the other side.”
There was a “big self-help package” that Persimmon could use to help support its sales, he added, such as doing more parts swaps with its customers.
Shares in Persimmon were down nearly 2.4% at lunchtime in London, more than the broader blue chip UK stock index.