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Brexit fails to stop house prices increasing

Brexit fails to stop house prices increasing

UK house prices increased by just 0.5 per cent in July, pushing the annual rate of house price growth to 5.2 per cent, from 5.1 per cent the previous month.

Nationwide’s latest house price index also revealed the average property cost £205,715 this month, up marginally from £204,968 in June.

The building society’s chief economist Robert Gardner pointed out that while this is the first month’s data following the EU referendum, when constructing the index the lender used data at the mortgage offer stage – meaning any impact from the vote may not be fully evident as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage.

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Headlines July 2016 June 2016
Monthly Index* 406.3 404.4
Monthly Change* 0.5% 0.2%
Annual Change5.2% 5.1%

Average Price (not seasonally adjusted)

£205,715 £204,968

* Seasonally adjusted figure (note that monthly percentage changes are revised when seasonal adjustment factors are re-estimated)

“Housing market transactions were always likely to soften over the summer after the surge in activity in March, as buyers brought forward purchases of second homes to avoid the stamp duty levy,” he stated, adding that determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult.

“In the near term, increased economic uncertainty may lead to weaker demand for homes,” Mr Gardner continued, suggesting leading indicators are consistent with softening ahead.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, said while the future is far from certain, we are not seeing mass cancellations of viewings or purchases, or great surges in the rental market, which may have been signs of panic.

He said: “Longer-term prospects for the housing market are strong particularly, while interest rates remain low and there is no prospect of an increase on the horizon. Indeed, the next move in bank rate is likely to be down rather than up and could come as early as next week.”

Jonathan Hopper, managing director of the buying agents Garrington Property Finders, said: “While you can’t read too much into the July house price rise, what is certain is that there hasn’t been a crash in property prices since Brexit, more of a soft landing.

“For the time being at least, grim predictions of a sharp fall in house prices simply haven’t materialised. The sheer lack of supply is helping to prop prices up. Estate agents’ stock levels have rarely been so low.”

peter.walker@ft.com