UK house prices defy referendum uncertainties in July

According to the latest report from Nationwide, house prices in the United Kingdom kept rising in July. House prices on an average rose 0.5 percent in July, which is higher by 5.2 percent when compared to a year back data. However, Nationwide’s chief economist has warned, “This is the first month’s data following the EU referendum. However, it is important to note that, in constructing the index, we use data at the mortgage offer stage – 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.”

Real Estate Sector is very vital for UK’s growth. It directly contributes 7 percent to the annual GDP of the country, however, the sector contributes more to economy indirectly. For the past couple of years, largest wage growth was observed in the construction sector and real estate services contributes around 21 percent to the services sector GDP, which in turn accounts for 78 percent of the national GDP.

Despite the gains report goes ahead and issue warnings on unusual uncertainties in the future outlook. It expects a decline in demand among home buyers large due to the uncertainties ahead. There has been a decline in new buyer enquiries and Household confidence has dropped. Still, the report doesn’t say with certainty that this would lead to a decline in house prices as the uncertainties may put sellers out of the market too. There could also be foreign buyers thanks to a lower exchange rate.