Quiet optimism is the mood of the day in the housing market, as house prices firmly ticked up in July.
Both the Nationwide and Halifax house price indices posted accelerating house price growth.
Nationwide reported a 0.3 per cent month on month increase and Halifax pointed to a stronger 0.8 per cent month on month rise.
According to Halifax, the average property cost £291,268 in July, up from £289,042 in June – a 2.3 per cent year on year rise.
Confidence in the housing market has improved across the sector, even if all the key indicators aren’t quite on board yet.
The RICS house price index fell further into negative territory to -19 from -17 in June.
Nonetheless, RICS survey participants were increasingly optimistic: near-term price expectations were at their highest in over two years in July.
How much do rates weigh in?
The Bank of England’s decision to cut interest rates by 0.25 per cent to five per cent, and the subsequent moderation of mortgage rates, has likely helped sentiment.
Many prospective property buyers and sellers had been holding off for interest rates to come down.
New buyer enquiries rose to in July, according to HSBC, while new seller instructions returned to growth after a very rocky June.
While mortgage affordability may remain stretched, it is likely further rate cuts are coming: financial markets expect a further 0.5 per cent rate cuts this year, followed by one per cent next year.
“The latest RICS survey suggests that now the election is out of the way the housing market is back to business, demand ticked up in July and this momentum is expected to build over the coming months as Labour keeps housing front of mind and mortgage rates start to fall,” RBC analyst Anthony Codling said.
“Investors believe a gradual recovery in the UK housing market is underway,” AJ Bell analyst Russ Mould added.
Although Sam Mitchell, chief executive of Purplebricks, warned that the picture was still bleak for renters and those looking to take their first steps onto the housing ladder.
They said: “The growing confidence we’ve seen take hold of the housing market in recent weeks has been supercharged by the Bank of England’s interest rate cut.
“However, the rental market is still a complete mess and there is a significant way to go before the outlook can be said to be as positive for prospective homeowners.
