SUMMARY

House prices fell by 0.5% in July according to Nationwide. This scales back annual UK house price growth to 10.6%, from last month’s 13.4% - the highest recorded annual figure in 17 years. Despite July’s small fall, we expect house prices to continue rising, as buyer demand remains strong and there is a shortage of supply. By the end of 2021 we expect house price growth across the UK to have reached 9.0%, including 3.2% during H2. You can read our revised mainstream market forecasts here.

An enormous 213,120 transactions were recorded in June as buyers rushed to complete before the first stamp duty deadline in England and Wales. This was the highest monthly number since October 1988 and over double the average for June between 2017-2019. We expect lower transactions than normal during July and August, before a small spike in September as the final phase of the SDLT holiday comes to a close. 

Activity will not grind to a halt post-SDLT holiday, however. In July, sales agreed were still 23% above the 2017-19 average, according to TwentyCi, with increased activity for higher value homes. In contrast, they report new instructions to be 9% below the average. June’s RICS survey supports this, with a majority of surveyors seeing falls in new instructions but increasing levels of new buyer enquiries. This supply/demand mismatch will support continued price growth. 

The average UK rent increased 1.2% in the year to June, according to the ONS. Rental growth has been particularly strong in the East and West Midlands, both up 2.4% annually. 

There are signs of confidence returning to the London rental market. Rents fell only marginally by -0.1% in the year to June, according to the ONS. But data from Zoopla, which is more responsive to a quickly changing market, recorded rental growth of 0.6% in the three months to May. The RICS survey supported this picture of rising demand for the three months to June. Rents in the city are still down -5.9% on an annual basis, but we expect rents to continue rising as restrictions on office working, leisure and hospitality ease. 

Annual house price growth in April was strongest in Neath Port Talbot in Wales, at 14.4%, followed by Rossendale in Lancashire at 13.1%. Only Aberdeen saw values falls over this period, down -1.0%.