The Office for National Statistics have recorded one of the biggest monthly drops in house price growth since records began between May and June. Annual growth slowed by an enormous 5 percent in the space of a month – from 12.8 percent to 7.8 percent. The ONS added the value of the average UK house increased by £3,000 in June, taking the average price to £286,000.
This means house prices have gone up by £20,000 in the space of a year. This comes as the UK’s rate of inflation jumped to 10.1 percent in July – the first time it has recorded a double-digit annual increase in more than four decades.
During the financial crisis, house prices fell by a total of 26.4 percent – from a high of 10.8 percent in June 2007, to a low of a -15.6 percent in February 2009. But the largest drop in annual house price growth in a month during this time period was 2.5 percent – half of that recorded for May to June this year.
The slowdown may have been partially exaggerated by the way the annual growth rate is calculated.
The rate was based on June 2021 – the final month in which buyers could benefit from the full stamp duty holiday, inflating prices at the time.
Sarah Coles, a senior personal finance analyst at the investment firm Hargreaves Lansdown, said: “For a clearer picture, it’s worth checking month-on-month figures. These show that prices were up an average of £3,000 between May and June.”
Lawrence Bowles of estate agency Savills also highlighted the impact of last year’s stamp duty holiday, saying the new figures “emphasise just how distortive the stamp duty holiday has been on the housing market.”
READ MORE: House price crash: Tens of thousands wiped off properties [REVEAL]
Real wages have plummeted at the same time as household spending and mortgage rates have shot up due to inflation. This has made it much harder for borrowers to afford a mortgage, reducing buyer demand.
With fewer buyers and less competition, house prices are likely to fall. Analytics firm the Centre for Economics and Business Research has predicted a year-long downturn in 2023, when prices will fall by 4 percent.
Another analyst, Capital Economics, forecast a two-year property market downturn, with price falls of between 5 percent and 10 percent by the end of 2024.
House price crash WARNING: Cost of homes growth plummeting faster than 2008 crisis & Latest News Update
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