Annual property price growth also fell back from 8.7% to 6.6%, according to the Nationwide property price index, largely due to a shortage of buyers.
Martin Gahbauer, Nationwide’s chief economist, says: “The 3 month on 3 month rate of change – a smoother indicator of the near term price trend – fell from 1.7% in June to 1.3% in July, significantly below the peak of 4.0% reached in September 2009.”
He said the healthy recovery in 2009 has not been consolidated this year.
“Despite the introduction of a second stamp duty holiday for the vast majority of first time buyers and record low interest rates, the number of properties changing hands across the UK is still running at only half the levels seen prior to the financial crisis and recession,” he adds.
He says the restrictive funding and economic and employment uncertainty continues to hold back the majority with the exception of wealthy buyers, with few confident enough to make such a large commitment when the future is so uncertain.
“Up until recently, the shortage of buyers in the market was more than offset by an even more severe shortage of properties for sale, with the result that prices rose. Evidence continues to build that this imbalance between supply and demand is easing,” adds Gahbauer.
The abolition of HIPs is encouraging buyers to test the market cost-free and many of the excess rental properties in 2009 have been put up for sale, he says.
“However, it will take several more months to establish whether house prices are now simply oscillating around a flat price trend or whether a period of downward trending prices may be in store.”
David Smith, senior partner, property consultancy Carter Jonas, says: “We are beginning to see a divide in the market between the mid to higher end, where demand is still strong and property prices are staying firm, and the lower end, where confidence and the ability to arrange mortgage finance are certainly constraining factors. A two tier market is slowly beginning to form.
Stamp”In 2009, prices rose irrespective of the general state of the economy. Henceforth prices are likely to be more closely correlated with the economy.”
