There is still no concrete evidence to imply that the continuing upward trend in house prices will change any time soon.
House prices rose again in July to reach yet another record high, but the newest data, released by Nationwide should be taken with a pinch of salt, if you are trying to assess what impact the UK’s decision to leave the EU is currently having on property prices.
According to the figures from Nationwide, the average price of home in the UK increased by 0.5% in July compared with June, and were up 5.2% on a year earlier, taking the average UK home value to £205,715.
The mortgage lender has suggested that increased economic uncertainty will dampen demand for property in the coming month, which could place downward pressure on property prices. But at this stage, there is no concrete evidence to imply that the continuing upward trend in house prices will change any time soon as a result of Britain’s pending exit from the EU; it will be at least another month or so until the main house price indices start to properly absorb the impact on home values during the early post-referendum period.
Although it is rather clear that household confidence dropped significantly, as illustrated by a fall in property transactions in recent weeks – this trend also has a lot to do with the government’s decision to introduce higher stamp duty charges for those acquiring second homes and buy-to-let property investments at the start of April.
But what the data from Nationwide does show is that even during times of economic and political uncertainty, the UK housing market remains strong, supported by a robust labour market and solid employment growth, not to mention historically low borrowing rates which could drop even further in the coming weeks.
Those investing in the property market, such as landlords, should continue to achieve attractive returns, at a time of low saving rates and stock market volatility.
Even if house prices do fall in the short-term, most buy-to-let investors will continue to receive a stable rental income, while homeowners banking on capital growth should be consoled that home prices will almost certainly rise further in the medium to long-term, even if they fall in the short-term, fuelled by a fundamental housing shortage in this country.