House prices fall 1% after Brexit vote as housing market continues to lose steam
The average UK house price dropped by 1 per cent last month, according to data that suggests the property market continues to run out of steam.
The price of the average British home dropped by just over £2,000 in the month to July to £214,678, partly reversing a 1.5 per cent increase in June, Halifax said.
The mortgage lender noted that it was too early to say if this was a result of the UK’s decision to leave the EU, but said that there were signs that house price growth was slowing in the longer term.
It echoes recent findings by Nationwide, which also said that rising demand for homes could ease in the coming months as a result of growing economic uncertainty. However, Nationwide's figures pointed to a rise in house prices in July.
Martin Ellis, Halifax housing economist, said: ‘There are signs that house price growth is slowing with a deceleration in both the annual and quarterly rates of increase in the past few months. Nonetheless, the current rates remain robust.’
While July’s monthly decline largely offsets June’s increase, month-on-month changes can be erratic. Moreover, summer months are usually quieter than the rest of the year for the housing market, with transactions dropping off as people are usually on holiday.
‘Overall, it remains too early to determine if there has been any impact on the housing market as a result of June’s EU referendum result,’ Ellis added.
On an annual basis, house prices were still 8.7 per cent higher than July last year, the same rate of growth recorded in June, and the lowest in a year, according to the report.
In the three months to the end of July prices rose by 1.6 per cent, up from 1.1 per cent growth in June but still ‘comfortably’ lower than earlier in the year, Halifax said.
Yesterday’s decision by the Bank of England to cut interest rates, pump more money into the economy and provide more cheap funding for banks is expected to result in lower mortgage rates for homebuyers.
This may push up demand for homes, which are already in short supply, helping to keep prices on the rise.
Ben Madden, managing director of London estate agents Thorgills said: ‘Although house prices are easing in the post-Brexit world, they're proving far stickier than many predicted.
‘This week's quarter point cut in interest rates certainly won't send house prices skyrocketing but it will help to further stabilise them.
‘The acute supply shortage was always going to act as a glass floor under prices post-Brexit and the latest rate cut has made that floor a few inches thicker.’
Alex Gosling, chief executive of online estate agents HouseSimple, was confident that the Bank’s actions will provide a stabilising effect on the economy.
‘Whether that will be enough to inject the necessary confidence into the property market to ensure house prices don't drop off a cliff, only time will tell,’ he added.
‘It will certainly provide a level of confidence to buyers and homeowners knowing that interest rates are unlikely to rise any time soon.’
The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – declined by 3 per cent between May and June, Halifax said, citing recent figures by the Bank of England.
This, in part, is a result of a hike in stamp duty for buy-to-let investors from April, which saw many carrying forward the purchase of homes that they would have otherwise bought later in the year.
Russell Quirk of eMoov.co.uk said: ‘Once the market picks back up in a couple of months’ time and the Brexit uncertainty starts to subside, I’m confident the previous upward trend in value enjoyed by UK homeowners will continue.
‘In the meantime, this slight slowdown in price growth coupled with yesterday’s rate cut by the Bank of England, make it an ideal time for those considering a property purchase to strike while the iron is hot. Or slightly cooled in this case.’