Nationwide reported today that house prices rose 0.6% month-on-month in July. This was a second successive increase as prices had risen 0.7% month-on-month in June. Prior to this, house prices had fallen in three of the previous four months.
Annual house price inflation on the Nationwide’s measure rose back up to 2.5% in July from a five-year low of 2.0% in June. It had previously fallen to June’s five-year low of 2.5% from 2.4% in May, 2.6% in April and a 2018-high of 3.2% in January.
Housing market activity off 2018-lows but still relatively lacklustre
While housing market activity has recently climbed off its 2018-lows, it is still relatively lacklustre. Latest data from the Bank of England show that mortgage approvals for house purchases rose modestly to a 5-month high of 65,619 in June from 64,684 in May and a 2018-low of 63,014 in April (which had also been the second lowest level after December 2017 since August 2016). Mortgage approvals had previously weakened to April’s low from 67,156 in January.
Despite reaching a 5-month high in June, mortgage approvals were still at a relatively lacklustre level. At 65,619, they were down marginally (0.2% year-on-year) from 65,746 in June 2017. They were also 19.2% below their long-term (1993-2018) average of 81,237
The impression remains that the housing market is struggling to really step up a gear in the face of still limited consumer purchasing power, fragile confidence and likely further gradual Bank of England interest rate rises over the coming months. There seems little evidence that the cutting of stamp duty for first-time buyers in last November’s budget has provided a significant boost to housing market activity.