House price growth steady in July
The latest Nationwide house price index has revealed a 0.5% increase in July, bringing annual house price growth to 5.2%,
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:
“This is the first month’s data following the EU referendum. However, it is important to note that, in constructing the index we use data at the mortgage offer stage – this means any impact from the vote may not be fully evident in July’s figures, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage.
“It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum. Housing market transactions were always likely to soften over the summer after the surge in activity in March, as buyers brought forward purchases of second homes to avoid the stamp duty levy, which took effect in April. 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.
“In the near term, increased economic uncertainty may lead to weaker demand for homes. Leading indicators are consistent with softening ahead. 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 (see chart below). 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.”
Read the full report here.