August house prices holding strong despite Brexit and tax changes - Nova
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Consumer confidence this week has been encouragingly strong and it seems this confidence has held true throughout August in the property market.
 
Nationwide has reported that house prices have increased by 0.6% for August 2016. Property market analysts were forecasting dips of 1% or 2% and many media channels mentioned figures much worse!
 
We are also now getting relatively positive data coming through on other areas of the economy that do, of course, have an effect on the property market. Retail sales, for example, have been significant better than expected since Brexit, and we have seen a rise in employment over that period to.
 
The GFK barometer, that measures consumer confidence, has seen an improvement from –12 at the beginning of August to –7 at the end of August.
 
Somewhat conflicting to this; the Bank of England released figures this week showing the number of mortgage approvals to home buyers has fallen to the lowest levels it has been since 18 months ago in July. Clearly there has been a dip in demand for property, but prices have continued to rise. This can logically be explained by looking at the supply side of the equation. Chief Economist at Nationwide, Robert Gardener, explains;
 
The pick-up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months. However, the decline in demand appears to have been matched by weakness on the supply side of the market. 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.”
 
The base rate cut to 0.25% will also assist many mortgage borrows as their monthly costs will be reduced. However there are still many hurdles for the property market to clear as we wait to see how the political situation takes shape and also how the economy fairs through the transition to a post EU nation.

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