House price growth slowed to 7.8% in June – but typical home still earns £20,000 a year, official figures show
- ONS figures reveal a slowdown in annual growth from 12.8% in May
- Across the UK, England saw the slowest house price growth at 7.3%
- The slowdown is due to the sharp price hike in June 2021
- Buyers were taking advantage of the stamp tax exemption at that time
Home price growth fell sharply to 7.8 percent in the year through June, down from 12.8 percent in May.
Figures from the Office for National Statistics reveal a slowdown in single-digit growth, which was driven by a rise in house prices in June last year as a result of tax breaks applied at the time.
The median home price in the UK was £286,000 in June 2022, which is £20,000 higher than this time last year.
Home price growth slowed in the year through June, down from double-digit growth in the same period through May
On 3 March 2021, the government announced the extension of the stamp duty holiday in England and Northern Ireland until 30 June 2021. The relief allowed homebuyers to save up to £15,000 in tax.
The ad saw rapid activity as buyers tried to secure their home purchases to take advantage of the tax break.
After that, the minimum relief has dropped to £250,000 until 30 September 2021, with a maximum savings cap of £2,500.
From 1 October 2021, the stamp duty limits reverted to their value before 8 July 2020. The tax credit for Scotland ended on 31 March 2021. The tax credit for Wales ended on 30 June 2021.
Tom Bell, head of UK residential research at Knight Frank, said: “Distortions in the stamp duty holiday mean that house price growth in June can be largely ignored.
“The bigger picture is that prices are waiting for gravity to arrive this fall. Higher interest rates have increased demand as buyers try to move before mortgage offers expire, but the more expensive lending environment will eventually see buyers’ budgets cut.
Meanwhile, the recovery in supply that began in late spring has been put on hold as more people took a summer vacation for the first time in three years. As supply grows and demand wanes, we expect price growth this year to end in single digits.
The average house price in Scotland increased by 11.6 per cent in the year to June 2022, to a record £192,000.
Wales also saw a record average house price in June of £213,000, with growth falling to 8.6 per cent from 14.1 per cent in May.
While England saw the lowest house price growth in the UK at 7.3 per cent in June, it also saw an average new home price of £305,000, the Office for National Statistics said.
Commenting on the figures, Nathan Emerson, CEO of the Estate Agents Authority, Property Mark, said: ‘As of this month, for the first time since recent price increases, the data has shown that the median is beginning to decline.
Despite this market slowdown, agents continue to report increases in time taken to exchange, with our latest Housing Market Report showing that 41 percent of sales took 17 weeks or longer, compared to just 10 percent before the pandemic.
As interest rates rise, homebuyers, who in principle took out a mortgage at lower rates before viewing any available properties, could begin to see it finish before the exchange. This can then have spillover effects on both failure rates and affordability.
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