House price inflation continued to fall in July, according to the Office of the Prime Minister?s (ODPM) latest report. The figures show a drop of 1% since June, bringing house price inflation to its lowest since 1996.
Despite this, house prices have continued to rise. ODPM reports an increase of 1.1% since June, the third consecutive rise in three months. The rises are weaker compared to this time last year but the fact that there have been new signs of growth indicates the market is still strong. Similar to other, more up-to-date transaction-based indices such as Nationwide and Halifax, the OPDM figures do not show the price falls reported by the Royal Institute of Chartered Surveyors (RICS) of Hometrack.
Drops in house price inflation were noted in all regions except Northern Ireland with London, the South-East and South-West as low as 1.5%. ?House price inflation turned last July and since then it has fallen rapidly from 18%. No doubt it will continue to fall this year until it reaches zero,? said Liam Bailey, Head of Residential Research at Knight Frank. But Bailey is optimistic about the latest figures: ?It is what we always hoped for ? a managed slow down?, he explained. ?Ideally house price inflation should stay below wage inflation, at around the 6% mark.?
Bailey reports that in the last couple of months Knight Frank has began to see more interest from new buyers, supporting similar data from Halifax and Nationwide. John Denney, Country Houses Director of Hamptons International agrees: ‘We had a busier summer than expected, and with buyers, viewings and offers all up on the same period last year. Although sensible pricing is vital, we don’t see further downwards pressure,’ he said.
?The drop in house price inflation is bringing about a healthier, sustainable market and in London and the South-East we are already seeing more new buyer activity,? Bailey concluded.