UK property prices rose by 5.1% in the year to June, according to Nationwide, continuing a year-long pattern of stable growth. However, the lender said that the EU Referendum result could lead to a cooling in the housing market.

Robert Gardner, Nationwide’s chief economist, said it has been difficult to gauge the pace of the fall back in housing demand in the months ahead because of the rush to buy before the new Stamp Duty surcharge on 1 April.

“Ultimately conditions in the housing market will be determined by conditions in the wider economy, especially the labour market. It is too early to assess the impact of the referendum vote on the economy. However, it is encouraging that the labour market had remained robust in recent months, with solid employment growth and the unemployment rate declining to an 11-year low in April,” he said.

Gardner added that lack of sales supply and high demand is also likely to support prices.

Regional split

In the second quarter of this year, the outer metropolitan area of London had the strongest price growth at 12.4% up from 12.2% in the first quarter. Despite a slowdown, London is still the second strongest region with prices up 9.9% to a new all-time high, 54% above pre-crisis levels.

The north-south divide continues to widen with the north seeing prices decline in the last three months, as average prices remain -9% below 2007 highs.

However, Gardner said the outlook for London rests on how labour market conditions evolve, although affordability remains stretched at 12 times income.

Ian Thomas, co-founder and director of LendInvest, the online property investment company, said:
“The vote to leave has come as a shock to many, but in our view, the fundamentals of the UK housing market won’t change abruptly – people still need homes to live in, whether we are in the EU or not, and the fact is that demand for housing massively outstrips supply.

“Brexit may create opportunities too. It could result in the housing market cooling and resetting in areas where house price growth has locked out first-time buyers and others that want to purchase property.”