UK house prices pick up a little speed in July

House prices rose by an average 2.5% from July last year, faster than growth of 2% in June

London: British house prices gained a bit of momentum in July after rising at their slowest annual rate in five years in June, mortgage lender Nationwide said on Wednesday.

House prices rose by an average 2.5 per cent from July last year, faster than growth of 2.0 per cent in June and above a forecast for a 1.9 per cent rise in a Reuters poll of economists.

In monthly terms, prices rose by 0.6 per cent in July from June, faster than the Reuters poll forecast of 0.2 per cent.

Nationwide said the annual increase remained in the narrow 2-3 per cent range of the past 12 months and the lender still expected prices to rise by only 1 per cent in 2018.

Britain’s housing market has slowed since the 2016 referendum decision to take the country out of the European Union. Eight months before Brexit is due to happen, Prime Minister Theresa May has still to agree with the EU about Britain’s future trading relationship with the bloc.

Nationwide economist Robert Gardner said an expected interest rate hike by the Bank of England on Thursday was likely to have only a modest impact on the housing market because most mortgages issued in recent years were on fixed interest rates.

However, around 12 per cent of homeowners already spend over 30 per cent of their gross income on their mortgage and “for those, some of whom will be on variable rates, any rate rise will be a struggle, even though the impact on the wider economy and most households is likely to be modest,” Gardner said.