UK house price growth picks up despite Brexit

Residential property prices in the UK increased marginally in June, despite greater uncertainty in the run-up to the EU referendum, the latest figures show. 

Nationwide’s monthly house price index revealed that house prices rose by 5.1% in June compared with the corresponding month last year, which marks an improvement on the 4.7% year-on-year growth recorded in May.

Month-on-month prices rose slightly by 0.2%, the same pace as in May but higher than the 0% consensus estimate.

“It has become difficult to gauge the underlying pace of demand in recent months, due to the surge in house purchase activity in March ahead of the introduction of stamp duty on second homes on 1 April," said Robert Gardner, Nationwide's chief economist.

“It will therefore be difficult to assess how much of the likely fall back in transactions in the quarters ahead is because buyers brought forward purchases to avoid additional Stamp Duty liabilities, and how much is due to increased economic uncertainty following the referendum result. Gauging the likely impact on house prices will be even more difficult."

Many housing market analysts, including economists and estate agents, are rather pessimistic about the outlook, warning that the market could very well slump in the coming months following the outcome of last week’s vote. But any downturn in the market could present investors with some enticing discounts.

“Brexit may create opportunities,” said Ian Thomas, co-founder and director of LendInvest, the online property investment company. “It could result in the housing market cooling and resetting in areas where house price growth has locked out first-time buyers and others that want to purchase property.”

But while the vote to leave the European Union has come as a shock to many, the fundamentals of the UK housing market will not change abruptly, according to Thomas.

He added: “People still need homes to live in, whether we are in the EU or not, and the fact is that demand for housing massively outstrips supply.”