Key facts
- UK house prices were flat in July, with a modest £58 increase.
- Annual house price growth slowed to 1.8% in July from 2.2% in June.
- Geopolitical tensions from the Iran war and high energy prices have dampened market sentiment.
- The Bank of England maintained its interest rate, impacting mortgage cost certainty.
- Prime Minister Andy Burnham has indicated no immediate plans to change stamp duty or council tax.
UK house prices remained largely stagnant in July, experiencing a slowdown attributed to a confluence of factors including geopolitical instability stemming from the Iran war, elevated energy prices, and the Bank of England's decision to hold interest rates steady. Annual house price growth decelerated to 1.8% from 2.2% in the previous month, with average prices increasing by only £58 to £277,542.
Robert Gardner, chief economist at Nationwide, noted that geopolitical tensions continue to exert upward pressure on energy and market interest rates. However, he also pointed to cooling inflation and slowing wage growth as factors that might provide the central bank with room to assess the need for further rate hikes. Nathan Emerson, chief executive of Propertymark, stated that the unchanged interest rate decision offers greater certainty for borrowers regarding future mortgage costs.
The market is now looking to Prime Minister Andy Burnham for potential reforms to the UK's housing tax system. While Burnham has confirmed no immediate plans to alter stamp duty or council tax, industry leaders like Emerson are urging for clarity on taxation, housing supply, and long-term reforms to bolster market confidence. Tom Bill, head of UK residential research at Knight Frank, suggested that Burnham's decision to rule out raising stamp duty might be an effort to prevent market distortion, acknowledging that uncertainty around property taxation and higher mortgage costs have suppressed demand.