Wednesday 31 August 2016 7:37 am

House prices went up in August - but Nationwide says the outlook post-Brexit vote is "cloudy"

Despite the recent Brexit vote  – and changes to stamp duty rules – pouring cold water on new buyer enthusiasm, house prices picked up again in August.

The Nationwide house price index for August showed prices increasing by 0.6 per cent, with annual house price growth increasing to 5.6 per cent, up from 5.2 per cent in July.

According to Nationwide, the impact of EU referendum uncertainty and the introduction of additional stamp duty on second homes has "softened" new buyer enquiries – as evidenced by the fact UK mortgage approvals fell to an 18-month low in July.

However, the building society said this downturn in the number of buyers has been offset by a drop in the number of properties going up for sale.

"The decline in demand appears to have been matched by weakness on the supply side of the market," said Nationwide's chief economist, Robert Gardner.

"Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to 30 year lows. This helps to explain why the pace of house price growth has remained broadly stable."


Gardner added that the outlook for the housing market is still clouded.

“What happens next on the demand side will be determined, to a large extent, by the outlook for the labour market and confidence among prospective buyers," he said.

“It is encouraging that the unemployment rate remained at a 10 year low in the three months to June, though labour market trends tend to lag developments in the wider economy. It is also positive that retail sales increased at a healthy rate in July.

“However, business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on the labour market and household confidence."

Others were more positive about the future of the UK housing market – eMoov founder and boss Russell Quirk said: "This continued increase (in prices) has been attributed to a slowdown in both buyer demand and housing supply, which has helped to keep the scales finely balanced. However, this cooling in the market on both sides of the fence highlights that any steam lost is almost certainly a seasonal adjustment.

"With the summer holidays now drawing to a close and life returning to normality for many, I expect we will see the UK housing market kick it up a gear as we head into September.”