House price growth remained steady in July, the latest House Price Index from Nationwide has revealed.
House prices grew by 0.5% in July, in spite of the Brexit vote, while annual house price growth was similar to June at 5.2%.
According to Nationwide’s findings, the average price for a home in the UK now stands at £205,715, up from £204,968 last month.
The index is one of the first since the shock result of the EU referendum was announced, but Robert Gardner, Nationwide’s Chief Economist, warned that the data is used at the mortgage offer stage – meaning that any shockwaves from the vote to leave may not be fully apparent in July’s figures.
This is because there is a short gap between a buyer making the decision to buy a home and applying for a mortgage.
Gardner believes it will be hard to tell the exact impact of the referendum on the housing market over the coming months.
While housing transactions were always likely to fall over the summer – mostly thanks to the drop-off in activity since late March, when there was a rush from buyers to avoid the additional 3% stamp duty surcharge implemented in April – it is going to be difficult for those in the industry to know whether the reduction in activity is due to the referendum or as a consequence of the recent tax changes.
In the short-term, Gardner says, uncertainty over the economy may cause weaker demand for houses. As might be expected, household confidence dropped sharply in the aftermath of the referendum result, particularly among those considering major purchases.
However, a fall back in demand won’t necessarily have any major impact on house prices, as sellers may also choose to hold off from placing their properties on the market.
Stock is still at very low levels and housebuilders may choose to delay construction projects until the economic outlook is clearer.
According to Gardner, surveyors have also reported a fall in instructions to sell alongside a drop in buyer enquiries.
All these things suggest that demand will continue to outstrip supply for the foreseeable future, in turn keeping house prices much the same as they are now.
Despite this, Nationwide says the outlook for the housing market does remain 'unusually uncertain' and it could take 'several months for the underlying trends in the market to become evident'.
Meanwhile, the National Association of Estate Agents' (NAEA) June Housing Market Report found that demand for housing, supply of available property and the number of sales going through were stable in the run-up to the EU referendum.
However, once the result was announced, estate agents saw more uncertainty from sellers and supply dropped temporarily.
Agents saw a rise in demand overall in June, suggesting that buyers weren’t deterred by the risk of Brexit in the run-up to the vote. An average 330 house hunters registered per member branch in June, up by 9% from May.
Immediately after the vote for Brexit, though, 57% of agents witnessed a fall in demand from potential buyers and 58% saw supply drop in the week after the result.
This is, however, expected to level out again in July.
The NAEA’s research also showed that the Brexit result didn’t affect first-time buyers, with only 28% of NAEA agents reporting any uncertainty from this demographic.
Also, a third of house sales in June were made to first-time buyers, the highest number seen since October 2015.
What’s more, the Brexit result didn’t appear to have any impact on the number of sales that were completed in June, with a total of eight completions per branch. The supply of available housing also stayed the same.
The industry, on the whole, seems to be upbeat and positive about the housing market’s ability to bat off any political and economic uncertainty.
Housing market confidence no doubt took a hit when Britain decided to leave the EU, but there are strong hopes that confidence levels will return to what was seen pre-Brexit before too long.