House prices dip in July but the 'warning light is still flashing'
Property values fall for the first time since February, according to the Halifax
By Anna White, Property correspondent
The post election surge in house prices has petered out as the residential property market enters the quiet summer selling season, but experts have warned that despite stricter lending, the homeowner is still vulnerable to "boom and bust".
House prices fell 0.6pc in July to £198,883, according to the Halifax House Price Index - the first drop in value since February.
The average house price in the UK has increased every month since February, with a 1.6pc rise in June caused by a short burst of high-end sales following the Conservative victory at the general election and an increase in consumer confidence.
Monthly house price surveys can often be volatile and don't necessarily reflect the long-term underlying trend in the residential properyt market. This week, for instance, Nationwide reported that house price growth actually picked up in July.
However, Halifax's quarterly and annual figures, which better reflect the state of the housing market, suggest growth is easing. Although house prices are now 7.6pc higher than they were in July 2014, this marks the slowest pace of annual growth so far this year.
House price growth peaked at 9.6pc in the 12 months to June, but has fallen back to 7.6pc in the year to July, the data showed.
The Halifax also said that confidence in the outlook for house price growth hit its highest level in four years following the general election in May but dropped back in June.
Independent buyer Henry Pryor attributed the slowdown to a deliberate policy by the Bank of England to address the "boom and bust" of the market.
Mark Carney, Governor of the central bank, concerned by the frenetic rise in prices - particularly in London and the South East - tightened lending last year. Talk of an interest rate rise will also cool the market further.
"But the warning light is still flashing on the Bank of England's dashboard," Mr Pryor said.
He cautioned that the growing number of buyers paying with cash will continue to inflate prices in the long run making it harder for first time buyers with a mortgage, and adequate deposit, to get on the ladder. In turn this will drive up rental prices in popular areas.
"Buyers are obviously stretching themselves to afford the record prices which are increasing far faster than wages. The gap is often being filled by the bank of mum and dad over whom the state has little control," he said. "We have reached the bonkers situation where kids are borrowing money from their parents to be able to afford the prices that their parents' generation as asking."
Adam Challis, head of residential research at JLL, said that while he expects the rate of house price growth to be more moderate in the long term it will still "remain ahead of wage improvements."
The threat of boom and bust was highlighted by Roger Bootle in the Telegraph this week. The economist warned that "the housing market is unpredictable and [come interest rate rises] we may see dramatic upheaval.