The increase follows a fall in May of 0.2% – the third straight month of falls – and sees the rate of annual growth increase from 2.1% to 3.1%.
Robert Gardner, chief economist at the building society, said that this ‘rebound’ in prices had erased the decline seen in the previous quarter, and noted there had been a shift in regional house price trends.
He continued: “ In Q2 the gap between the strongest performing region (East Anglia, which saw 5% annual growth) and the weakest (the North, with 1% growth) was the smallest on record, based on data going back to 1974. Nevertheless, when viewed in levels, the price gap between regions remains extremely wide.”
A year of false starts
Alex Gosling, CEO of online estate agents HouseSimple.com, said that the housing market hasn’t really got going this year, with Brexit and the general election holding back the traditionally buoyant Spring period, and with us now heading into the slower summer months.
He continued: “The problem is, even if the buyers are there, there isn’t much they can do if the sellers aren’t. Buyers in many areas must be feeling a little dejected because they are seeing the same stock being advertised, often stock that is over-priced by optimistic sellers.”
A tentative recovery
Mark Harris, chief executive of broker SPF Private Clients, said that while the Monetary Policy Committee was split at its last meeting over whether to increase base rate, most feel that the recovery is “too tentative” to justify a rise at this stage.
He continued: “With Brexit negotiations likely to be long and complex, it may be that an interest rate rise will be delayed as long as possible. In the meantime, mortgage rates continue to look extremely competitive, as lenders remain keen to lend.”
Affordability still a concern
Jonathan Hopper, managing director of Garrington Property Finders, said that it would have been unthinkable for much of the past decade to predict that London would see the second slowest rate of house price growth in the country, yet that is just what is happening now.
He added: “The affordability squeeze remains a major concern. With consumer prices now rising at 2.9% a year – and far outstripping wage growth – people’s level of disposable income is shrinking even as house prices march upwards. As the gap between the two grows to untenable levels, some would-be buyers will either give up or the market will correct itself by restricting rates of house price inflation. We’re now at a tipping point – where buyers have become intensely price-sensitive and pragmatic sellers are often willing to trade price reductions for the certainty of a sale.”