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Annual house price growth slows ahead of uncertainty of a Brexit vote

The rate house prices are rising has slowed ahead of the EU Referendum with greater uncertainty expected from the Brexit vote.



Halifax have reported a slowdown in the growth of their annual house price index reducing from 9.2% to May last year to 8.4% this year with the average cost of a UK home now at £216,823.

The continued rise in house prices means first time buyers would require a larger deposit or higher earnings to purchase their first home.

According to Martin Ellis Halifax housing economist, house prices in the three months to June were 1.2% higher than in the previous quarter, down from 1.5% in May.

House prices continue to increase at a slower rate although this precedes the EU referendum Brexit result and therefore it is far too early to determine any impact since.

Nationwide report stable growth

The house price index from Nationwide reported annual growth has remained stable with the annual rise at 5.1% to June compared to 4.7% the previous year.

Over a month the growth rate is unchanged at 0.2% with the average cost of a UK home slightly lower than the Halifax at £204,968.

Robert Gardner Nationwide's Chief Economist said, it has become difficult to gauge the underlying pace of demand due to the surge in house purchases in March before the new Stamp Duty tax in April.

The tax increased to an additional 3% of the purchase price and applied to homeowners buying second homes and buy-to-let landlords.

The following table shows how this is changing:
Property Values Standard rates Buy-to-let rates
Up to £125,000 0% 3%
£125,000 - £250,000 2% 5%
£250,000 - £925,000 5% 8%
£925,000 - £1.5m 10% 13%
over £1.5m 12% 15%
As buyers brought forward purchases to avoid the additional stamp duty tax Mr Gardner said there would be a fall back in transactions in the quarters ahead as well as increased economic uncertainty following the referendum result.

However, estate agents are reporting a record low number of properties on the market and this will provide underlying support for prices even if demand softens.

London growth remains robust

The Nationwide data shows the South East with the strongest annual growth in the country with property prices up 12.4% with London in second up 9.9%.

With rising prices and reduced supply of suitable properties for home movers, more remortgage buyers are remaining in their existing home and saving for a bigger deposit.

London property prices are 54% higher than before the financial crisis in 2007 compared to only 10% for the UK as a whole.

The rise in London house prices allows the older equity release buyer to access cash in their homes with a lifetime mortgage, using this for any purpose such as home improvements or holidays.

The rapid rise in house prices means home movers will find the gap between their current home and the next increases requiring a larger mortgage or deposit.

The outlook for London is more difficult to assess, says Mr Gardner as both buy-to-let landlords and overseas investors play a larger role in the market.

Employment in the Capital is extremely robust and 17% higher than the pre-crisis peak although it remains uncertain how the Brexit vote could impact the city.

According to Nationwide the average London property price is at a record high of £472,384 and 12 times the average earnings in the capital.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to pay for care at home or even benefit a family member.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage monthly cost calculators, property value tracker chart and equity release calculator.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.


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