House prices rise: Biggest year-on-year increase since 2014 amid Brexit warning

Experts say prices will likely weaken as heightened uncertainty following the UK’s vote to leave the EU weighs down on consumer confidence

Joe Watts
Political Editor
Tuesday 16 August 2016 12:05
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House prices rose in June but experts warn the Brexit vote is likely to hit the property market
House prices rose in June but experts warn the Brexit vote is likely to hit the property market

Young people already struggling to buy a first home were today confronted with the biggest year-on-year house price rises since the end of 2014.

But despite the jump, experts said the UK’s Brexit vote was beginning to dampen the market, with the impact on prices likely to show next month.

Official data revealed the annual increase in house prices climbed to 8.7% in June from 8.5% in May.

The figures mean the average UK house price was £214,000 in last month – £17,000 higher than in 2015 and £2,100 higher than the previous month in 2016.

The year-on-year increase was the highest since October 2014, with the trend for strong growth dating back further.

Dr Howard Archer, of IHS Markit, said: “Pretty solid fundamentals for house buyers - high employment, decent purchasing power and very low mortgage rates – remained a source of support for the housing market through the first half of 2016, while a shortage of properties has also supported house prices.”

But he went on to explain that prices will likely weaken as heightened uncertainty following the UK’s vote to leave the EU weighs down on consumer confidence.

The new figures showed that in London, hit by an early slow-down of the high-end market, the annual rate of increase dipped to 12.6% from 13.4% in May and a peak of 14.8% in March.

The latest data from the Bank of England reported that mortgage approvals for house purchase dipped to a 13-month low of 64,766 in June from 66,722 in May.

In January this year the approvals had hit a two-year high of 73,353.

Last week a survey of housing surveyors suggested prices were now falling in London, East Anglia, the North of England and the West Midlands.

The survey from Royal Institution of Chartered Surveyors said house price inflation had slowed in July, but could recover over the next 12 months.

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