The data from the Nationwide Building Society also shows that the annual pace of growth is slower, 10.6% in July compared with 11.8% in June.
The slowdown takes the average price of a home in the UK to £188,949 and Nationwide chief economist Robert Gardner said that although prices have now risen for 15 months in a row it is clear that the pace of growth is slowing.
‘The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months. Mortgage approvals declined by almost 20% between January and May, and there has also been some softening in forward looking indicators, such as new buyer enquiries,’ he explained.
‘At least part of the slowdown in activity relates to the introduction of Mortgage Market Review measures. The modest rebound in mortgage approvals in June adds weight to the notion that the slowdown will prove temporary, though the underlying pace of demand remains unclear,’ he pointed out.
‘With the labour market strengthening, mortgage rates expected to remain low and consumer confidence rising, activity is likely to recover in the months ahead. Over the longer term, the trajectory of house prices will remain crucially dependant on supply side developments,’ said Gardner.
‘While there have been some encouraging signs that construction activity is picking up, the pace of home building continues to run far below most estimates of what would be required to keep up with household formation in the years ahead,’ he added.
According to Paul Smith, chief executive officer of independent estate agents haart, the latest figures are a welcome ‘pit-stop’ which is necessary for long term, sustained growth. He said that annual growth figures are always a far more reliable indicator of long term trends.
‘Some areas of London are undergoing a price correction whereby people are not willing to pay the prices as they stand, but the laws of supply and demand are still in place and we are seeing steady house price growth in the country as a whole. All elements are pointing to a very busy autumn for the market,’ he added.
The Nationwide also reports that a modest recovery in the number of housing transactions, a pick-up in house price growth and the introduction of higher stamp duty rates on more expensive properties have all contributed to a sharp increase in stamp duty revenues in recent quarters, the majority of which is paid on residential property transactions.
Indeed, stamp duty revenues are near the all-time highs recorded in 2007/2008, reaching over £10 billion in the 12 months to June 2014.
‘Variation in house prices have a strong impact on how much stamp duty is paid across different regions of the UK, with some regions contributing a much greater share of the total stamp duty revenues than their share of housing transactions might suggest,’ said Gardner.
The Nationwide estimates that London contributed around 42% of the total stamp duty paid on residential properties in 2013/2014 even though the capital only accounted for around15% of house purchase transactions.
