House prices fell by 0.6% in July but are still almost 8% higher than they were a year ago and are likely to rise again over the coming months, according to the Halifax.
The average price of a UK property fell from more than £200,000 to £198,883 last month, bringing annual house price inflation down from 9.6% in June to 7.9%, its lowest level since December 2014.
However, over three months prices were up 2.4% and analysts put the monthly fall down to a correction after the Halifax recorded a surprising 1.6% rise in prices in June.
“July’s dip looks to be primarily a correction from June’s jump which was markedly at odds with most other surveys,” said Howard Archer, chief economist at IHS Global Insight. “Latest data and survey evidence largely indicate that housing market activity is on the up, and we suspect it will continue to improve.”
On Tuesday rival lender the Nationwide reported house prices were up 0.4% in July, bringing the average UK house price to £195,621. It is recording annual house price growth of 3.5%.
Stephen Noakes, a managing director at Halifax agreed that, despite the July fall, the underlying pace of house price growth “remains robust”.
“Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,” he said.
A separate survey from the Office of National Statistics on Thursday showed that the average home in England and Wales cost a record 8.8 times the typical local salary in 2014.
However, prices in some areas have reached 20 times local incomes. House prices in Westminster are now 24 times local salaries (compared to 12 times in 2002) while the average rent there will eat up 78% of the relatively high local earnings.
The 15 least affordable areas for private renting were all London boroughs, with tenants in those such as Newham and Brent expected to hand over 65% of their pay for the average private flat.
