The Nationwide have released their House Price Index for July.
- House prices increased by 0.5% in July
- Annual house price growth similar to last month at 5.2%
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“UK house prices increased by 0.5% in July and, as a result, the annual rate of house price growth was little changed at 5.2%, compared with 5.1% in June.
“This is the first month’s data following the EU referendum. However, it is important to note that, in constructing the index, we use data at the mortgage offer stage – this means 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. Housing market outlook unusually uncertain
“It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum. 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, which took effect in April. 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.
Rob Weaver, Director of Investments at property crowdfunding platform Property Partner, comments:
“It’s difficult to read too much into this uptick in July but positive growth can be seen as proof of the residential property market’s underlying strength in 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.
“It’s still up in the air whether it was the rush to beat the stamp duty deadline in March or the EU referendum that’s led to the drop off in transactions in subsequent months.
“But if the past is any indicator of the future, there’s still no concrete evidence to imply this broad, continuing upward trend in house prices will change any time soon.
“The key determinants, ultimately, are economic conditions. Homebuyers should be encouraged by a robust labour market and solid employment growth, particularly in London, and historically low borrowing rates which could drop even further.
“Yet 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.