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House prices slow but no crash post Brexit

House prices have risen by 8.3% in the year to July 2016 – down from 9.7% in June as shown in The UK House Price Index. This is calculated by the Office for National Statistics (ONS) and the Land & Property Services Northern Ireland.

In July, pricing pressures kept growing, the Index states, reflecting the strength of demand relative to supply in the housing market, but “there were indications that some of the heat had been taken out of the market, with several indicators pointing towards weaker housing demand and supply in recent months”.

Rob Weaver, director of investments at property crowdfunding platform Property Partner, says: “London is defying the doom-mongers. Monthly figures fluctuate and should be treated with caution, nevertheless a 1% jump in prices in July, combined with an annual increase of over 12%, looks robust.”

The East of England in the past year saw the greatest house price growth by by 13.2% and the South East also enjoyed growth at 11.9%.  Another region experiencing a still positive market were Yorkshire and The Humber, which saw annual house price growth of 4.7%, though the West Midlands had a monthly price fall of -0.8%.

Thomas Fisher, economist at PwC, said: “Today’s data from the ONS shows a moderation in house price growth from 9.7% in the year to June to 8.3% in the year to July. But house prices still edged up by 0.4% between June and July.

“This suggests that market demand remained relatively resilient after the Brexit vote, despite some slowdown in mortgage lending. However, as many of these transactions will have been in motion since before the referendum, more data will be needed to make a proper assessment of how the referendum result is affecting the housing market.

“Our own expectation is that the UK housing market will cool not crash. In our main scenario, average UK house price growth is projected to decelerate to around 5% in 2016 and around 1% in 2017.”

Chief economist at Yorkshire Building Society, Andrew McPhillips said: “House price growth slowed in July as people postponed their decision to get on to the property ladder until they can be more certain of the future of the UK economy. We expect the market to be volatile in the medium term, as any dips in house prices could be swiftly followed by an increase as prospective buyers look to make the most of lower prices.

“Looking to the long term, we expect people’s desire to own a property, combined with the persisting lack of housing stock to cause house prices to increase in the future. This will affect people across all tenures by both limiting the number of people who are able to own their desired home while also pushing up the cost of renting. It’s paramount that the UK significantly ramps up its house-building efforts in order to make homes more affordable in the long term.”

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