House prices fell slightly in July - but would-be buyers shouldn't get their hopes up too much.
According to Halifax, which has released its monthly index, the dip is likely to be just a summer lull. And the average house price across the UK is still a whopping £198,833, up £13,000 or 7.9% on this time last year.
Houses are now less affordable than at any time since the peak of the 2000s property boom, with a house price to earnings ratio of 5.2, compared with an average since 1983 of 4.1.
Propping up prices is high demand combined with a shortage of supply. According to the Royal Institution of Chartered Surveyors' (RICS), the stock of homes available for sale fell in June for the third month in a row, hitting a record low. New instructions also fell in June, marking the tenth decline in the past 11 months.
"The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand," says Stephen Noakes, Halifax's managing director of retail customer products.
The number of homes sold in June rose 5% on the month before, according to HMRC, at 104,590 - the first time that monthly sales have topped 100,000 since September 2014.
During the second half of last year, the number of home sales fell off dramatically, as buyers were hit by new mortgage lending regulations that made it harder to get a loan.
Lately, buyers have been feeling more confident, says Howard Archer, chief economist at IHS Global Insight.
"We expect support for housing market activity – and house prices - to come from very low mortgage interest rates, strengthening earnings growth, higher employment and elevated consumer confidence," he says.
But, he warns, this could all change if interest rates rise, as they are expected to do in the coming months.
"Indeed, mortgage lenders have already started to withdraw some of their lowest rate mortgages," he says. "At least though, the Bank of England is stressing that interest rates will only rise gradually and to a limited extent."
The Halifax report confirms the conclusions of the Centre for Economics and Business Research. Last month, it warned that housebuilding is still falling well short of the rate it needs in order to keep pace with population growth - meaning price rises are set to continue.
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