Growth in United Kingdom house prices picked up in June, but agents and analysts are warning that Britain’s decision to leave the European Union will affect demand and prices in the coming months.
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One of Britain’s biggest mortgage lenders expects Britain’s chronic shortage of homes to underpin house prices even if demand softens after the referendum vote.
On an annual basis prices rose 5.1 percent, beating expectations for a 4.9 percent rise and compared to 4.7 percent in the previous month. BOE said the effective interest rate on new mortgages remained at 2.41 percent in May, the lowest since the series began in 2004. Average prices in the North are now 9% below their pre-crisis peak.
He added: “Regional house price trends also maintained the pattern prevailing in recent quarters, with southern areas of England recording the fastest rates of house price growth in Q2”.
The survey shows the split between prices in the north and south of England widened compared to past year.
It will therefore be hard 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.
Despite a slowing in the second quarter, London was still the second strongest region with prices up 9.9% to a new all-time high, some 54% above pre-crisis levels and compared with 10% for overall United Kingdom house prices.
The gap in average prices between the South and the North of England has increased to almost £169,000, an increase of £24,000 from a year ago.
“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”.
Although London experienced a slowdown in growth, it remained the most expensive place to live, with prices at £472,384.
He said: “They show that the market is more resilient than we might have expected”.
‘All this points to a soft landing rather than a crash, but the uncertainty is such that normal rules have been suspended, ‘ he added. “Clearly we are going to have to see what impact the referendum vote had on prices and activity in the next set of figures”.
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The fundamentals of the United Kingdom housing market won’t change, according to Ian Thomas, director of online property investment company LendInvest.
