The average U.K. home price rose last month to a record-breaking £230,280 (US$298,251)—though overall market activity remained subdued in the country, according to the latest Halifax Housing Price Index.
Prices grew at an annual rate of 3.3% in July, a major increase from the 1.8% annual growth reported in June, according to the monthly report released on Tuesday. Halifax, a division of the Bank of Scotland, has been publishing the monthly housing figures since 1983 and July’s home price was the highest on record.
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"While the quarterly and annual rates of house price growth have improved, housing activity remains soft," said Russell Gally, managing director at Halifax, in a statement on Tuesday.
"Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year," he continued.
Not only have mortgage approvals increased slightly, but the size of mortgage loans has edged up nationwide too, according to Monday’s report from the Mortgage Advice Bureau. Buyers were borrowing an average of £175,929 (US$227,785) in June, slightly up on May, and from the same time last year.
On a regional level, the North West of England and Wales saw the biggest annual increases in loan amounts, rising 12.7% and 11.5% respectively. Wales also logged the largest monthly change as the average mortgage amount rose 5.6% in June compared to May.
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On Thursday, the Bank of England raised the base rate from 0.50% to 0.75%, only the second rate rise in a decade. Halifax anticipates that the uptick in interest rates is unlikely to make mortgages unaffordable or slow transaction volumes further, Mr. Gally said.
The lackluster housing market stands in stark contrast to the country’s robust labor market, where full-time employment rose significantly earlier this year, Mr. Gally noted.
"Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices," Mr. Gally said.