Changes to the stamp duty holiday came into effect last month
Average UK house prices rose in July by 7.6% compared to the year before, however, the rate of growth has slowed down.
This is according to Halifax, the mortgage lender, which said that the average property price is now at £261,221.
The July figure is 0.4% higher than the month before when the annual growth rate was higher at 8.7%.
Changes to the stamp duty holiday came into effect last month as buyers will now get less favourable terms.
However, a shortage of homes is likely to continue to support house prices, according to Halifax.
At 7.6%, the growth in house prices is still easily exceeding wage growth, as has been the case for the majority of the past decade.
There are a number of factors that appear to have caused the dramatic rise in house prices even in the face of the pandemic. Firstly, the cost of borrowing is historically low. Secondly, there is pent-up demand following a temporary slowdown. Lockdowns have created a desire among people to have more space. Finally, sizeable government subsidies have played their part.
Russell Galley, a managing director at Halifax, said
“Recent months have been characterised by historically high volumes of buyer activity, with June the busiest month for mortgage completions since 2008. This has been fueled both by the ‘race for space’ and the time-limited stamp duty break. With the latter now entering its final stages, buyer activity should continue to ease over the coming months, and a steadier period for the market may lie ahead,” said Galley.
“Latest industry figures show instructions for sale are falling and estate agents are experiencing a drop in their available stock. This general lack of supply should help to support prices in the near-term, as will the exceptionally low cost of borrowing and continued strong customer demand.”