House prices 2015: another all-time high as growth returns
Prices continue to outpace wage rises, but Nationwide says rate is 'stabilising'
House prices were back on the rise in July and have reached a new all-time high, according to the latest index published by Nationwide. But the building society also claims growth rates are beginning to stabilise near to long-term wage rises.
The BBC reports that prices rose 0.4 per cent on a monthly basis in July, after a 0.2 per cent dip in June. This meant the annual rate of growth increased from 3.3 per cent to 3.5 per cent and the average price across the UK hit £195,621, a new all-time high for the index. While this is above the average price cited by Land Registry for England and Wales last week, both are now showing valuations at record levels and a trend of rises outpacing growth in people's pay.
The Guardian quotes Nationwide's chief economist Robert Gardner, who says there are "tentative signs that annual house price growth may be stabilising close to the pace of earnings growth", which has historically been around four per cent. However, wages have not grown at this rate since 2010 and set a five-year high of 3.2 per cent in June, some way below the rate of increase in house prices.
Alongside the usual pricing update, the index contained data on the amount of stamp duty collected in the first six months of the year following radical changes introduced in December to remove the 'cliff-edge' application of the rates at certain price points. Nationwide said £275m less was paid in stamp duty and that 85 per cent of purchases now attracted a lower rate, with those occurring in the south particularly benefiting.
There is also the suggestion the changes could have helped to boost prices as the figures showed less "bunching" around the tax increment thresholds of £125,000, £250,000 and £500,000. Before December sales were often agreed at threshold levels rather than slightly above as buyers were put off by hefty increases of thousands of pounds in the tax bill.