UK house prices edged up slightly in July while the impact of the vote to leave the EU on the housing market still remains uncertain, according to Nationwide.
Its latest House Price Index showed that annual house price growth rose to 5.2% in July, down from 5.1% in April.
Property prices rose 0.5% during the month to a new record high of £205,715.
However, it may be too early to determine the impact of the vote as the figures are based on mortgage offers. This is because there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage.
Economists widely expect uncertainty as a result of the Brexit vote to hit housing activity, with sellers holding off putting their properties on the market until the economic impact is clearer.
Robert Gardner, Nationwide’s chief economist, said that housing market transactions were always likely to “soften” over the summer after the surge of activity in March as buyers brought forward purchases of second homes to avoid April’s stamp duty levy.
Gardner said: “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.”
He said that in the near term increased economic uncertainty may lead to weaker demand for homes.
“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.
“In the run-up to the vote the Royal Institute of Chartered Surveyors (RICS) reported declines in new buyer enquiries and expectations of weaker price growth amongst surveyors, though these trends predate the vote and are likely to have been impacted by the recent tax changes as well as the referendum.
“How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead.”
Jeremy Leaf, North London estate agent and a former RICS residential chairman, said: “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.”
