Halifax: House prices drop but mortgage applications rise

Despite a 0.1% house price drop in June mortgage enquiries surged to double the number seen in May, the latest house price index from the Halifax has revealed.

Halifax found that average house prices dipped by 0.1% in June, following a 0.2% drop in May. However, prices are still 2.5% higher than in June 2019.

Average house prices now stand at around 0.9% lower than before the lockdown.

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David Westgate, group chief executive at Andrews Property Group, said the market was performing better than had been anticipated.

He said: “Nobody can deny the property market is facing a huge amount of uncertainty given rising unemployment, but for now it is proving far more resilient than many expected.

“In some areas, we are actually seeing prices nudge up slightly as demand outstrips supply.

“Since mid-May, the pent-up demand that accumulated during lockdown has been unleashed on the market and has even put a slight spring in its step.

“We have just had the best four weeks of business trading in 2020 and the figures coming in are actually slightly higher than this time last year.

“The great unknown is whether the bounce we have seen in recent weeks is simply a dead cat bounce.

“Much will depend on what additional supports the government announces to protect the economy in the short- to medium-term so Wednesday’s Summer Statement will be watched closely.

“Given that we have just been through the greatest economic shock in this country’s history, the property market is holding up relatively well.”

Hugh Wade-Jones, managing director of Enness Global Mortgages, agreed that there are positives to be taken from the latest house price index.

He said: “More positive news for the UK property market and hopefully the first of a double dose of good news this week.

“Unfortunately, it looks as though the top tier of the market will once again be shown the cold shoulder in terms of any stamp duty relief or otherwise.

“However, we’ve seen a promising increase in market activity in recent months, and this has been driven of late by foreign buyers returning to the top tiers of the market, in particular.

“While domestic activity remains the backbone of the UK property sector, it is this foreign investment that will help spur the market back to full health.

“Although it might take a little while longer to materialise at the top level, it bodes very well for the remainder of the year where overall house prices are concerned.”

Russell Galley, managing director, Halifax, concluded:  ““Activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK.

“New mortgage enquiries were up by 100% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months.

“However, whilst encouraging, it remains too early to say if this level of activity will be sustained.”