Residential property prices in the UK rose marginally in June despite uncertainty in the market in the run-up to the EU referendum, the latest figures show.
Nationwide’s house price index in June rose by 0.2% compared to the previous month, which was the same rate of home price growth recorded month-on-month in May but higher than the 0% consensus estimate.
On a seasonally adjusted annual basis, the index increased by 5.1% in June, up from the 4.7% in May and higher than the 4.9% the market expected.
Robert Gardner, Nationwide’s chief economist, insisted that it is “too early” to assess the impact of the referendum vote on the economy. But he did say that it was “encouraging” that the labour market, which will help determine conditions in the UK economy, and ultimately the housing market, had remained robust in recent months.
He said: “With solid employment growth and the unemployment rate declining to an 11-year low in April. Borrowing costs also remained close to historic lows.”
Overall, it has become difficult to gauge the underlying pace of buyer demand in recent months, due to the surge in house purchase activity in March ahead of the introduction of Stamp Duty on second homes on 1 April.
“It will therefore be difficult to assess how much of the likely fall back in transactions in the quarters ahead is because buyers brought forward purchases to avoid additional Stamp Duty liabilities, and how much is due to increased economic uncertainty following the referendum result,” added Gardner. “Gauging the likely impact on house prices will be even more difficult.”
PPA opinion:
We agree with Nationwide’s Robert Gardner that predicting the likely impact on residential property prices has been made a lot harder after recent changes in the market. But one expert has suggested that the slump in housebuilder share prices since the outcome of the referendum implies a 5% decline in house prices over the coming year – while we do not necessarily expect the dip in prices to be that steep, the fact that we are facing a potential mini-credit crunch, which would curb demand for homes, means prices could very well fall.