House prices rise in July at fastest annual rate since May 2003 - ONS

UK house prices rose in the year to July at their highest annual rate since May 2003, according to figures released on Wednesday by the Office for National Statistics.

Average prices increased 15.5%, up from 7.8% in June. The ONS attributed the jump in annual inflation to a base effect from the falls in prices seen this time last year, as a result of changes in the stamp duty holiday.

Average house prices rose by £6,000 between June and July this year, compared with a £13,000 decline between the same months last year.

The average house price was £292,000 in July, up £39,000 from the same month a year earlier.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "House price growth has doubled in a month, growing faster than for 19 years, but all is not what it seems. This is the latest step in a house price Hokey Cokey, and is the result of changes to the stamp duty holiday last summer. It doesn’t affect the outlook for the market, which is facing real challenges.

"Distortions from the end of the most generous period of the stamp duty holiday last June are playing an enormous role in price rises. There was a burst of demand last June, and people rushed to get sales over the line before the deadline - pushing prices up. As a result, we had a lull in July where prices fell back month-on-month and annual rises slowed to 7.1%. We’ll see echoes of this through the next few months, as we get another bump and a dip from the end of the stamp duty holiday in September last year.

"We’re likely to reach a tipping point if we hit a recession. Growth was flat for the most recent quarter, and lower than expected, so while we haven’t tipped over into a shrinking economy, we may well be on the verge of it. High employment levels have been key to the health of the property market, so if jobs become increasingly insecure it could make all the difference."