Index shows annual growth rate of 5.1% in June, up from May’s 4.7%
Growth in UK house prices picked up in June, but agents and analysts are warning that Britain’s decision to leave the EU will affect demand and prices in the coming months.
The average price of a property rose by 5.1% from a year ago to £204,968, according to Nationwide building society (pdf). This compares with an annual growth rate of 4.7% in May. It has been fairly stable over the past 12 months at between 3% and 6%.
The data gives a snapshot of the housing market immediately before the EU referendum.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “Following the referendum, demand likely will weaken as unemployment begins to edge up and confidence falls. Meanwhile, banks soon will reflect the recent increase in funding costs in their mortgage rates. Prices in London look particularly vulnerable, given that job insecurity has increased in the City and banks will be thinking twice about high loan-to-income lending.”
Foxtons, the London-focused estate agent, issued a profit warning this week. It believes the vote to leave the EU will limit property sales in the capital for the rest of the year.
Jonathan Hopper, the managing director of buying agents Garrington Property Finders, said the brisk pace in June was likely to be the high water mark for the property market for some time. The data showed a “functioning market with decent price growth but limited supply – a languid calm before the storm”, he added.
“Unfortunately this data is about as much use in predicting the future course of the property market as sun-dappled photos of the summer of 1914. It’s a historical record of a lost age before Europe changed for ever. The referendum result has since plunged the property market into a ‘hard reset’, especially in the higher price brackets,” Hopper said.
“While we can’t be sure how much things will slow, it’s inevitable that more nervous investors will sit on their hands while the opportunists circle. Prime central London, where most property purchases are discretionary, is the most exposed to such confidence-sapping doubts.”