House prices in the UK continued to defy predictions of a post-referendum collapse in August, according to the latest index from Nationwide Building Society.
House prices have increased 0.6 per cent month-on-month to hit a new record average of more than £206,000. The monthly rise represents an annual increase in the year to August of 5.6 per cent, up from 5.2 per cent in July. Robert Gardner, Nationwide
's chief economist, commented, "The pick-up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months."
"However, the decline in demand appears to have been matched by weakness on the supply side of the market. Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to 30-year lows. This helps to explain why the pace of house price growth has remained broadly stable."
"It is encouraging that the unemployment rate remained at a 10-year low in the three months to June, though labour market trends tend to lag developments in the wider economy. It is also positive that retail sales increased at a healthy rate in July."
But he added, "Business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July and, if sustained, this is likely to have a negative impact on the labour market and household confidence. Most forecasters, including the Bank of England, expect the economy to show little growth over the remainder of the year."
Rob Weaver, director of investments at property crowd-funding platform Property Partner
and a member of the residential committee of the British Property Federation
, said that, increasingly, it seemed the predicted collapse of the property market post-Brexit might not happen.
"The property market has stood up to a strong headwind of political and economic uncertainty, and prices haven’t collapsed as many said they would after the UK voted to leave the EU. The sheer lack of supply has counterbalanced the fall in demand over the summer months," he said.
"There have been seasonal, political and stamp duty-related reasons for the fall in demand, but the extreme lack of supply has evened things out. The interest rate cut earlier in the month has given the market a confidence boost and eased any post-Brexit jitters. The jobs market has remained strong so far but its performance between now and the New Year will be crucial."
“It’s still too early to know what the full impact of Brexit will be on the housing market but for the time being, property prices are showing a degree of resilience."
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Nicholas Finn, executive director of Garrington Property Finders
, added, “The laws of evolution have somehow ceased to apply to the economic forces driving Britain’s property market."
“With both supply and demand falling, it’s survival of the weakest. For now the struggle between the two has resulted in a benign stalemate – with average prices continuing to creep up even as the number of sales falls."
“Despite the headline rise in the rate of price growth, this second month of post-referendum data reveals a property market that is still unsettled rather than upbeat."
“On the front line we’re seeing some strong intent but a lack of clarity among buyers. The cut in interest rates and resilient levels of consumer confidence mean there are some determined buyers, especially among those who sat on the fence in the run-up to the Brexit vote."
“There’s a growing sense that this is a buyer’s market – with the more bold frequently asking for substantial discounts – but many are still being cautious as the dust has yet to settle."
“August is traditionally a slow month among buyers, but as the summer lull ends there is a good chance that momentum will pick up. Crucially, sellers have battened down the hatches rather than abandoned ship. Price growth has eased, and among the top tiers of the market, prices have returned to more genuine market levels."
“Buyers who had been waiting for the post-Brexit slump to bottom out should act fast, or they risk missing the boat.”
For more news and features about property, visit our Commercial and Residential Property sections
For more about how Brexit may affect the UK property market have a look at our Brexit section.
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