But there has been a gradual decline in annual growth since February when it was running at 8.9%, and excluding London and the South East year on year growth was 4.8%, the figures from the LSL Property Services/Acadata index shows.
The index also shows that quarter on quarter sales were down 20% year on year compared with the second quarter of 2015 but the index report says it is too early to say if Brexit is impacting the market.
The East of England was the top performing region with annual growth of 9.3%, up from 9.1% the previous month. This was followed by annual price growth of 7.2% in the South East and 6% in Greater London.
According to Adrian Gill, director of Your Move and Reeds Rains estate agents, while the vote to leave has definitely resulted in uncertainty, there’s near unanimity among commentators that the impact is yet to show in the figures and for now, we’re left with mixed signals.
He explained that on the one hand, house price inflation on an annual basis continues to slow year on year but last month saw the market continue its fight back following price falls in March to May with July recording a modest gain after June’s 0.5% rise, with average prices up 0.2% or £700. However, overall this means prices remain £3,386 below their February peak, but £15,422 above their July 2015 levels.
The index report suggests that the fall in sales is 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. It points out that the spike in sales in March was followed by a massive decline the following month, from which the market has since been recovering.
It also points out that transaction volumes have grown every month since April and are now well above February levels. Moreover, the exceptional sales level in March 2016 more than compensates for the decline since.
‘Overall, for the first six months of each year, we estimate transactions in 2016 at some 4% higher than in 2015. Sales volumes continued to increase in July, but again this still tells us little about the referendum vote, since transactions recorded at the Land Registry for the month mostly relate to offers made by purchasers in June, or even earlier,’ Gill explained.
He added that the April stamp duty change may also account for much of the apparent slowdown in prices as 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 data suggest that any slowdown is unlikely to be of the scale suggested by the 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. There will also continue to be significant regional variations,’ Gill explained.
‘Brexit may well have an impact on the housing market, but it’s not showing yet. Even when it does, there will be positive as well as negative influences on the market, which clearly has some strong long term drivers for continued house price inflation,’ he added.
