The annual rate doubles to 15.5%, United Kingdom house price growth soars

According to Jonathan Hopper, chief executive officer of the company Garrington Property Finders, the significant increase was "first and foremost a statistical oddity."

Although the annual rises in England and Wales were even larger, coming in at 16.4% and 17.6% respectively, these figures hid considerable regional variances. For example, the annual price growth in southwest England touched 20.7% in July, while the figure for London was 9.2%.

Both Scotland and Northern Ireland had unemployment rates that were lower than the average for the United Kingdom, coming in at 9.9% and 9.6% respectively.

As a result of the stamp duty vacation, buyers in England and Northern Ireland did not have to pay tax on the first £500,000 that they spent purchasing a property until the 30th of June, 2021. After that, the tax credit was reduced, and the threshold was lowered to £255,000 to qualify for it. On October 1, 2021, it was readjusted to the level of £125,000 that it had been prior to the pandemic.

According to the ONS,

the annual rate of home price inflation in the UK reached a record high of 15.5% in July, marking the highest level seen since May 2003. In addition, it was stated that the typical price of a home in the United Kingdom was £292,000 in July, "which is £39,000 higher than this time last year."

Hopper warned his listeners that "those of a fearful disposition may want to turn away from the official house price figures in the coming months, as we're ready for a rollercoaster trip," and he added that "we're set for a rollercoaster ride."

The doubling of the rate of price increase was "not what it seems," according to Sarah Coles, a senior personal finance analyst at the investment firm Hargreaves Lansdown. She added that it does not impact the forecast for the market, which is experiencing significant challenges.

According to the ONS, Northern Ireland has maintained its position as the country in the United Kingdom with the lowest average house price, which is at £169,000.

Gabriella Dickens, senior UK economist at Pantheon, made the following statement: "Looking forward, we anticipate home prices to decline outright in the second half of the year given the magnitude of the increase in mortgage rates.

"The rate on a two-year mortgage with a 75% LTV ratio jumped to 3.64% in August, from 1.64% in January, and it is destined to surge to roughly 4.5% by the end of the year, assuming markets are correct about the current path for Bank Rate. In January, the rate was 1.64%.

"A number of the most relevant indicators have already begun to point in a negative direction."

"For example, according to the RICS Residential Market Survey, the number of fresh buyer inquiries reached its lowest level in August since the market was shut down for the first lockout.

"However, there will be some support to prices from the recently-announced cap on energy costs, which will minimize the pressure on real wages, the persistent shortage of supplies, and the solid labor market. This will provide some offsetting support to prices.

"All in all, then, we think that house prices will drop by about 2% over the next six months, and then will start to recover in 2023, particularly if the BoE holds back from increasing Bank Rate as quickly as investors currently expect," said one analyst. "In other words, we think that the housing market will continue to be a mixed bag for the foreseeable future."