The Nationwide Building Society has reported that UK house prices rose by 0.6% in August.
This resulted in a small pick up in the annual rate of house price growth to 5.6%, from 5.2% in July, although this remains within the 3-6% range prevailing since early 2015.
The average price of a home in August was £206,145.
Robert Gardner, the Nationwide’s chief economist, said: “The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months. New buyer enquiries have softened as a result of the introduction of additional stamp duty on second homes in April and the uncertainty surrounding the EU referendum. The number of mortgages approved for house purchase fell to an eighteen-month low in July.
“However, the decline in demand appears to have been matched by weakness on the supply side of the market. Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to 30-year lows. This helps to explain why the pace of house price growth has remained broadly stable.
“What happens next on the demand side will be determined, to a large extent, by the outlook for the labour market and confidence amongst prospective buyers.
“It is encouraging that the unemployment rate remained at a 10-year low in the three months to June, though labour market trends tend to lag developments in the wider economy. It is also positive that retail sales increased at a healthy rate in July, up almost 6% compared to the previous year, even though consumer confidence fell sharply during the month.
“However, business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on the labour market and household confidence.
“Most forecasters, including the Bank of England, expect the economy to show little growth over the remainder of the year. Indeed, these concerns prompted the Bank’s Monetary Policy Committee (MPC) to implement a range of stimulus measures at the start of August, which will provide support to economic activity and the housing market.”
Russell Quirk, CEO of eMoov.co.uk, added: “Now two full months on from Brexit D-day and still no inkling that there has been any immediate impact on the UK housing market, in fact quite the opposite.
“House prices have increased 0.6% in August, a marginal increase, but double that when compared to Nationwide’s figures for this time a year ago. So rather than the changes to stamp duty and the Leave vote toppling the property market, we’re actually in a stronger position than we were in August 2015.
“This continued increase has been attributed to a slowdown in both buyer demand and housing supply, which has helped to keep the scales finely balanced. However, this cooling in the market on both sides of the fence highlights that any steam lost is almost certainly a seasonal adjustment.
“With the summer holidays now drawing to a close and life returning to normality for many, I expect we will see the UK housing market kick it up a gear as we head into September.”