Brexit Continues To Affect Property Market

UK house prices rose to a new record high in July, but rising demand for homes could ease in the coming months as a result of growing economic uncertainty after Brexit, according to a new report.

The price of a home rose to a record high of £205,715 on average, up by £10,094 in one year alone, the latest index from Nationwide Building Society suggests. Prices rose by another 0.5 per cent in June.

This is the first month's data following the EU referendum and Nationwide said that, with the housing market in an 'unusually uncertain' condition, it may take months to understand what the underlying trends in the market are. However a separate report published today forecast that the UK's decision to exit the EU will not stop house prices rising, except for a temporary dip in London.

Although the next couple of years will record lower house price inflation, by 2021 the average UK property will be around £40,000 more expensive, the Centre for Economics and Business Research said.The economic think-tank forecasts house prices across the UK will rise by 5.7 per cent this year, down from 6 per cent in 2015. They will then slow in 2017, with an estimated growth rate of 2.2 per cent.

Despite a moderation in house price growth over the coming years, the average price tag will still hit £234,000 in six years’ time, after an annual 3.9 per cent increase, it forecast, nationwide,and added that it is particularly difficult to assess the impact of Brexit because a stamp duty increase for second homes was just introduced in April, which also muddies the water.

'It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum,' Robert Gardner, Nationwide's chief economist, said.

'How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead. It is encouraging that conditions were robust in the run up to the vote, with the unemployment rate falling to a ten-year low in the three months to May.

'The decline in long term interest rates to new all-time lows in recent weeks should also help to keep borrowing costs low and provide some support for demand.'