House price sees minimal change in July: Nationwide

UK house prices increased by 0.5% in July, according to the latest House Price Index from Nationwide.

Related topics:  Finance News
Amy Loddington
28th July 2016
Nationwide

As a result, the annual rate of house price growth was little changed at 5.2%, compared with 5.1% in June.

The index noted that, although this is the first month’s data following the EU referendum, it is compiled of 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.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

“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.

“Even if there is a fall back in demand as a result of economic uncertainty, the impact on house prices is not certain, as potential sellers may also hold off from placing their properties on the market. The stock of homes on estate agents’ books is already close to its lowest levels for thirty years, and surveyors have reported a decline in new instructions to sell alongside a fall in buyer enquiries (see chart on next page). Moreover, housebuilders may react to the uncertainty by delaying construction, even though home building is already failing to keep up with the natural increase in the population."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says:

"The housing market showed considerable resilience in the uncertain period leading up to the Referendum. It is too early to say how much of an impact the decision to leave the EU has had but since the vote on the ground we are seeing buyers and sellers negotiating much harder to ensure they are doing business. This has inevitably led to some softening in prices in areas where affordability is most stretched.

"The future is far from certain but at least we start from a position of relative strength which should help. We are not seeing mass cancellations of viewings or purchases, or great surges in the rental market, which may have been signs of panic.

"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."

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