Home Price Index rises, July CPI unchanged

Dwayne Harmon
August 17, 2018

The Consumer Price Index (CPI) rose to 2.5pc in July, up from 2.4pc in June, the first rise recorded since November 2017, said the Office for National Statistics.

House prices in Britain are rising at their slowest pace in nearly five years as subdued demand and rising mortgage costs weigh on the property market.

The biggest fall was in London where prices dropped by 0.7% year-on-year.

ONS head of inflation Mike Hardie said: "The housing market across the United Kingdom again slowed with London house prices seeing their largest annual fall since September 2009 in the aftermath of the economic downturn".

House prices in the West Midlands rose the fastest in the United Kingdom compared with a year ago, according to official figures.

However, it had the highest average house price of £477,000 - almost four times higher than the North East.

Regionally, London properties continue to cost significantly more than other parts of the country despite a 1% dip in the average property; 2018 prices in January were £479,468 and are now at the bargain average of £476,752.

Mike Hardie, head of inflation at the ONS, said: "Transport tickets and fuel, along with often erratic computer game prices, drove up costs for consumers".

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Wales saw average house prices increase by 4.3% over the previous 12 months to stand at £157,000.

The latest inflation figures come just 24 hours after the ONS showed that unemployment in the United Kingdom has fallen to just 4%, a low not witnessed since the early 1970s.

Earlier this week official figures showed wages growth falling steadily over recent months, from 2.8% in February to 2.4% in June. Inflation numbers from July 2017 till June 2018 had adverse base effect due to GST... which had led to inflation increasing at a faster pace.

'The big question is what happens to prices when the property market's own version of Quantitative Easing is taken away?'

Manufacturers raised the prices they charged by 3.1 percent, weaker than June's 3.3 percent but slightly above the forecast in the Reuters poll.

The average price in Northern Ireland was £133,000, marking an increase of 4.4% over the year. The number of house sales is a bit lower than it was at the same time previous year. Three newly acquired homes in Nottingham were reserved by tenants within two weeks of the sale completion and six properties in Colchester bought in mid-June are already occupied.

Property transaction statistics for June show that on a seasonally adjusted basis, the number of transactions on residential properties with a value of £40,000 or greater was 96,340.

The annual growth rate of United Kingdom house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. "While the Bank of England's recent interest rate rise adds further pressure to household finances, we don't expect the cost of borrowing to alter significantly" he suggests.

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