Residential property prices increased at their fastest annual pace in four months in July, but the early impact of Brexit has not yet been picked up by the data provided by mortgage lender Nationwide.
Property prices rose by 0.5% in July compared with June, and were up 5.2% on a year earlier, taking the average UK home value to £205,715, according to Nationwide.
The lender said that the resulting impact of the UK’s decision to leave the EU on UK house prices was “not certain” at this stage but did state that the uncertainty following the Brexit vote could reduce demand among buyers, which in turn may dive down home prices; it will be the end of August before the Nationwide’s house price data starts to properly absorb the early post-referendum period.
“Any impact from the vote may not be fully evident in July’s figures, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage,” said Robert Gardner (below), Nationwide’s chief economist.
He continued: “In the near term, increased economic uncertainty may lead to weaker demand for homes. Leading indicators are consistent with softening ahead. Household confidence fell sharply in the wake of the referendum result, especially attitudes towards making major purchases, which in the past has correlated with mortgage activity, though less closely in recent years.
“How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead.”
Rob Weaver (pictured), director of investments at property crowdfunding platform Property Partner accepts that it is hard to read too much into this uptick in July but he does believe that the positive data underlines the UK housing market’s underlying strength even during uncertain times.
“No one really knows what the full impact of Brexit will be on the economy but while more volatile assets like stocks and shares fluctuate and falter, investors in UK residential continue to earn a stable, positive return,” he said.
Weaver believes that the “disconnect between supply and demand” will continue to place upward pressure on the property market, and fully expects to see prices rise in the medium to long-term, even if they dip in the short-term.
He added: “Fundamental to the housing market is that Britain simply doesn’t have enough homes. Brexit or no Brexit, demand outstrips supply, which is further exacerbated by a growing population.
“Buy-to-let investors should be consoled that if house prices level off for a while, they’re still producing a relatively substantial income.”
Russell Quirk (below), the founder and CEO of online estate agent eMoov.co.uk, agrees that the longer term future looks bright for those investing in the UK housing market.
He said: “The UK property market is one of the strongest in the world and historically house prices are higher than July 2014 and July 2015, so it’s looking pretty healthy across the board.
“It’s important UK home sellers take any Brexit doomsayers and their forecasts with a pinch of salt and avoid acting irrationally where the sale of their home is concerned.
“We are entering a traditionally slower time for the property market and so this cool in price rate growth is always likely to happen during the summer months. Once September rolls around again we predict things will start to pick up and prices will continue their sharp ascent.”