HOUSE PRICE GROWTH SLOWS TO 1.8% AS IRAN CONFLICT DAMPENS MARKET

Annual house price growth slowed to 1.8 per cent in July, down from 2.2 per cent in June, as geopolitical tensions and higher interest rates dampened demand. Month on month, average house prices rose marginally by £58 to reach £277,542. Robert Gardner, chief economist at Nationwide, attributed the slowdown to uncertainty caused by the conflict between Iran and the US, which exerted upward pressure on energy prices and market interest rates. The Bank of England's decision to hold interest rates at 3.75% for a fifth successive month also weighed on sentiment, reversing earlier market expectations for rate reductions.

The Bank of England's Monetary Policy Committee split on the decision, with six members voting to maintain rates and three calling for an increase to 4 per cent. Governor Andrew Bailey stated that interest rates could be raised if the Middle East conflict persists and drives inflation higher, whilst rates could be loosened if the conflict resolves credibly. The Bank predicted UK inflation will average around 3 per cent this year before slowing to 2.7 per cent in 2027, with the Consumer Prices Index expected to peak around 3.2 per cent later in 2024. Cooling inflation and slowing wage growth provided the committee with "more breathing space" to assess future policy decisions.

Nathan Emerson, chief executive of Propertymark, called on the government to provide "clarity around taxation, housing supply and long-term reforms" to reinforce market confidence. The new Prime Minister Andy Burnham confirmed there are no immediate plans to change stamp duty or council tax, though has not yet provided greater certainty on broader housing taxation. Emerson urged the government to clarify its position to help prospective buyers plan with confidence amid ongoing economic uncertainty.