Are rising property prices indicative of a market that is resilient to Brexit?

Are rising property prices indicative of a market that is resilient to Brexit? [Photo: STUDIO GRAND OUEST via iStock]

In the weeks and months before the EU referendum in June, the majority of the news that was circulating about the state of the property market erred on the side of doom and gloom. There were fears that demand was seize to a halt and house prices would see a dramatic fall in the period following the vote, should the British public choose to exit the EU. 

In the two months since the Brexit vote was confirmed, however, has this prediction of falls and negativity actually come to fruition? According to the latest house price index from one of the leading mortgage providers, it doesn't actually appear to be the case. 

Nationwide reported that in August, the British property market has actually seen a rise in house prices, and further than just climbing, the speed at which prices are growing has actually outpaced that seen in July, showing that the market continues to not only act resiliently in the face of Brexit, but also to show its underlying strength and grow as a result. 

According to Nationwide, the average house price in the UK now exceeds £206,000, which means that there has been a rise across the country of 0.6 per cent when compared to July. On an annual basis, the figures are even more impressive, with prices now 5.6 per cent higher than they were last August. 

This annual increase was higher than that which was in evidence in July, when prices were around 5.2 per cent higher than in the same month in 2015. This alone shows that the doom and gloom stories before the Brexit vote were not actually all that accurate, as the property market has barely even stalled, and prices have continued to climb as buyers return to the sector after a brief period of political uncertainty in the post-Brexit world. 

"The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months," Nationwide said in its report. 

Many economists operating in the housing market are also now starting to admit that the fears they had over Brexit and what it might end up doing to the property market as a whole have largely been unfounded, as the strength that the market has on its own has carried it through this period of worry. 

"We believe housing market activity is likely to be limited over the coming months, and prices will weaken as prolonged uncertainty following the UK's vote to leave the EU constrains consumer confidence and willingness to engage in major transactions," said Howard Archer, chief UK economist at IHS Global Insight.

He went on to say that there will be cooling in the market in the coming months as the predicted recession starts to rear its head. And this is a belief that seems to be shared across the board with experts at present. However, given that the sector has shown such resilience in the face of Brexit already, will this really be the case, or are we set to see the market become a far stronger force in the months ahead?