Defying all Brexit-odds and suggestions of a slowing market, Britain’s house prices saw an increase in August, Nationwide recently reported.
In August, asking prices went up 0.6% compared to July. This was recorded despite any evidence that the housing market has slowed down recently due to referendum and stamp duty increases on buy-to-let and second properties.
Annually, growth went up to 5.6% from 5.2% one month earlier. This was partly caused by the crippling supply of properties in the market and a decline in buyer demand.
This, most recent growth of house prices also outsripped the growth rate immediately before the referendum, the Nationwide report revealed.
The monthly rate of growth beat the consensus of -0.2%. Samuel Tombs, chief economist at Pantheon Macroeconomics, however, described the Nationwide index as not totally reliable. He said, it has “consistently overstated house price growth between mid-2013 and mid-2014, and it has understated growth over the last year”.
Mr Tombs added: “The indication from the Nationwide data that house price growth strengthened after the Brexit vote— its index increased by 0.5pc month-to-month in July and 0.6pc in August, compared to average increases of 0.4pc in the first six months of 2016 — is incongruous to all the other noises from the housing market.”
Experts do not think these increases will last. Hansen Lu, of Capital Economics, said: “While data from Nationwide point to resilient house price growth in August, leading indicators suggest that this won’t last.”
“Indeed, with house price expectations muted and the economy set to weaken, we think house price growth will slow over the remainder of the year.” He predicted growth would slow to 2pc by the end of 2016.
The recently published and very influential survey by the Royal Institution of Chartered Surveyors gave reason to expect a slower price growth and levels of activity in the market.
Robert Gardner, Nationwide’s chief economist, said:
The pick-up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months.
New buyer inquiries have softened as a result of the introduction of additional stamp duty on second homes in April and the uncertainty surrounding the EU referendum. The number of mortgages approved for house purchase fell to an 18-month low in July.
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.”