Britain’s housing market may see some near-term weakness after the Brexit vote last month, though it will take a while to fully assess the underlying trends, according to Nationwide Building Society.
The lender reported on Thursday that monthly house-price growth picked up to 0.5 percent in July from 0.2 percent in June, taking the annual gain to 5.2 percent. However, because it uses mortgage offer data, any impact from the U.K. vote to leave the European Union may not be fully captured in July’s figures.
Consumer confidence has plunged in the wake of the vote to leave the European Union, as has sentiment in the housing market. That could undermine demand, which has been supported in recent years by employment growth and low borrowing costs. Still, the impact on home prices isn’t clear as potential sellers could hold off putting their properties on the market at a time of heightened uncertainty.
“In the near term, increased economic uncertainty may lead to weaker demand for homes,” said Nationwide Chief Economist Robert Gardner. “The outlook for the housing market remains unusually uncertain and it may take several months for the underlying trends in the market to become evident.”
Homebuilder Taylor Wimpey Plc said this week that while it’s too early to assess what the longer term fallout from the referendum result may be, it’s not seen a meaningful impact so far.
U.K. housing has also softened since the start of the year, when demand was boosted by buyers trying to beat a tax change and save money on purchases. Gardner said that determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult.