Real estate prices in the UK rise to record levels

The property prices in the United Kingdom recorded their highest increase in July in six months, while interest rates fell. According to the latest house price index by Halifax Bank, the average property prices rose by 2.3 percent compared to the previous year, marking the fastest growth since January. The average house price in the United Kingdom is now £291,268, reflecting an increase of over £2,200 compared to the previous month. Banks are lowering their mortgage rates to attract buyers back into the market, with some offering rates below 4 percent. Last week, the Bank of England reduced interest rates from 5.25 percent to 5 percent for the first time in four years, and economists forecast further rate cuts by year-end. House prices remained largely stable in the three months to July, according to Halifax. The bank's data show that house prices are gradually recovering after a slight decline last year. Amanda Bryden, Head of Mortgages at Halifax, stated: "In July, UK house prices increased by 0.8 percent monthly, following three largely flat months. The average house price stands at £291,268, which represents an increase of over £2,200 compared to the previous month. Annual growth rose to 2.3 percent, the highest rate since the beginning of the year. We expect house prices to maintain a modest upward trend for the rest of the year." Andrew Montlake from Coreco, a mortgage broker, also confirms this trend and adds that high demand and low supply have kept house prices remarkably robust despite high interest rates. With falling interest rates, the pent-up demand is beginning to release, especially in areas with a tight property supply. Price increases were higher than average in Northern Ireland and the Northwest, with growth rates of 5.8 percent and 4.1 percent, respectively. The East of England was the only region in the United Kingdom where prices fell by 0.4 percent. Ian McKenzie of the professional body Guild of Property Professionals emphasizes that these regional differences reflect the diverse nature of the UK property market and opportunities in various areas. Stockbrokers predict an increase in demand, as lower mortgage rates improve affordability for first-time buyers and investors. According to Jeremy Leaf, former chair of the Royal Institution of Chartered Surveyors, the recent base rate cut has already led to renewed interest and the acceleration of existing transactions, even in a typically quiet market phase. Economists, however, warn that the rate cuts were widely anticipated by buyers and sellers. Leaf said: "We do not expect fireworks in the coming months, but a steady rise." Tomer Aboody of MT Finance cautioned that the October budget by Rachel Reeves could become a stumbling block, as a possible increase in the Capital Gains Tax to income tax levels could change market conditions. Sarah Coles from Hargreaves Lansdown emphasized that a hike in the CGT rate could increase the risk for property investors, potentially leading to an increased sale of properties.