House prices in the UK returned to growth last month, as the market recovered from a dip in June after the end of a tax break on stamp duty.
The average price of a home rose 0.6% in July to £272,664, bouncing back from the biggest month-on-month fall in more than two years in June, according to Nationwide.
Britain’s biggest building society said that the annual rate of house price growth also improved to 2.4%, up from 2.1% in June, and purchase activity remains buoyant with 64,200 mortgages approved in that month.
Nationwide also noted that buying a property is now the most affordable it has been in more than a decade, although still almost six times the average UK wage.
“The price of a typical UK home is about 5.75 times average income, the lowest this ratio has been for over a decade,” said Robert Gardner, Nationwide’s chief economist. “This is helping to ease deposit constraints for potential buyers, as has an improvement in the availability of higher loan-to-value mortgages.”
However, Nationwide said that borrowing costs remain high, with the interest rate on a typical five-year fixed-rate mortgage for a buyer with a 25% deposit more than three times the level seen in autumn 2021.
“On the ground, transactions are holding together relatively well,” said the London estate agent Jeremy Leaf. “As a result, looking forward we expect to see a modest improvement all round, particularly if interest rates are reduced in the next month or so as widely expected, despite lingering concerns about the economy.”
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Temporary stamp duty cuts in England and Northern Ireland expired in April, adding thousands of pounds to the cost of many transactions.
