House price growth accelerated in August, despite the slowdown in demand amid Brexit and property tax rises, as a weaker supply of homes coming onto the market underpinned values.
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Prices rose 5.6 percent compared with the same month a year ago, faster than July’s 5.2 percent. The annual rate picked up to 5.6% from 5.2%.
The average house price in the United Kingdom now stands at £206,145, up from £205,715 in July.
“We believe housing market activity is likely to be limited over the coming months and prices will weaken as prolonged uncertainty following the UK’s vote to leave the European Union constrains consumer confidence and willingness to engage in major transactions, and also hampers economic activity”.
But Nationwide added that while buyer demand had softened, the number of new homes coming to market had also been low.
In monthly terms, house prices rose by 0.6%, from a rise of 0.5% in July.
“However, the decline in demand appears to have been matched by weakness on the supply side of the market”. “This helps to explain why the pace of house price growth has remained broadly stable economy”.
Mr Gardner said the Bank of England’s decision to lower the base rate to 0.25 per cent will provide an immediate benefit to many mortgage borrowers who will see their repayments become cheaper.
That kept the balance of demand and supply tight, which in turn has supported prices.
Wider market research suggests that interest in purchasing property has waned, as the Bank of England reported mortgage approvals had fallen to an 18-month low with reports of a drop in new buyer enquiries.
Gardner also looks into how the interest rate cut will affect the property market.
Howard Archer, chief United Kingdom and European economist at IHS Global Insight, said: “Despite the resilient house price growth in August reported by the Nationwide, we expect house prices to come under increasing pressure over the coming months”.
Mr Weaver added: “The interest rate cut earlier in the month has given the market a confidence boost and eased any post-Brexit jitters. However, the downside for house prices could be limited markedly by a shortage of properties for sale”.
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“With the summer holidays now drawing to a close and life returning to normality for many, I expect we will see the United Kingdom housing market kick it up a gear as we head into September”. The House of Lords Select Committee on Economic Affairs suggested we need to build 300,000 homes a year to have a moderating effect on house prices, but last week’s housebuilding figures from the Department for Communities and Local Government show we are nowhere near that.
