The UK housing market is likely to slow down but it will take months before the impact of Brexit becomes clear, Nationwide Building Society said on Thursday.
Nationwide, said to be the UK?s biggest building society, reported that UK house prices increased by 0.5% in July compared with June. As a result, the annual rate of house price growth was little changed at 5.2%, compared with 5.1% in June.
The average price of a UK home rose to ?205,715 in July, Nationwide stated.
Based on mortgage offers made by Nationwide, this data is the building society?s first since the EU referendum.
?This means any impact from the vote may not be fully evident in July?s figures, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage,? explained Robert Gardner, Nationwide?s chief economist.
?In the near term, increased economic uncertainty may lead to weaker demand for homes. Leading indicators are consistent with softening ahead. Household confidence fell sharply in the wake of the referendum result, especially attitudes towards making major purchases, which in the past has correlated with mortgage activity, though less closely in recent years,? Gardner continued.
?How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead.?
A separate report from economic forecaster Cebr, the Centre for Economics and Business Research, forecasts that house prices will increase by 5.7% over 2016 as a whole.
This takes into account an expected slowdown in the second half of the year due to the uncertainty following the referendum and the introduction of a stamp duty surcharge on purchases of second homes and rental properties.
As a result of Brexit, Cebr has downgraded its house price expectations for 2017 and now expects prices to rise by just 2.2% next year.
But in the medium term the organisation expects house price growth to pick up as exit negotiations with the EU progress and investors and households get a clearer sense of how post-Brexit UK will look.
Nina Skero, Cebr senior economist and main author of the report, said: ?Although Brexit has certainly sent shockwaves Cebr expects the housing market to slow down but not plummet._
?Years of underbuilding mean that demand would have to fall very dramatically to meet the low level of supply increases.
?Keeping in mind that construction companies are very likely to limit their output further in light of Brexit, price pressures will also come from the supply side.?
London will be most impacted by Brexit uncertainty, Cebr believes. Average house prices in the capital are predicted to increase by 6.8% in 2016, but fall 5.6% in 2017 before returning to growth in 2018 and beyond.