Government index puts house price growth at 8.1% in May

Ryan Bembridge

July 19, 2016

house price increase graph

House prices rose by 8.1% in the year to May 2016 before the EU Referendum, the government’s UK House Price Index shows.

The historic data shows prices rose by 1.1% from April to average at £211,230 but but Andrew Bridges, managing director of Stirling Ackroyd, reckoned prices have fallen since in some parts of the country.

He said: “British property buyers are weathering a storm of uncertainty, and the hatches were battened down a little in the first week or two after the Brexit vote.

Index reveals regional house price divide

“But this is a storm, not climate change. Beyond a couple of months’ volatility, the real drivers of UK property values have hardly changed.

“Across the country there are still too few homes to match demand, and if anything the construction of new homes is now slowing – all further strengthening the long-term prospects for investors in the UK property market.

“Particularly in London, the world is bigger than Europe and bigger than a few months one summer in 2016. The world will carry on turning and London will remain the capital of the world.”

Ian Thomas, co-founder and director of property investment company LendInvest, felt fears of a house price storm are overblown.

He said: “Events since the Brexit vote are showing signs that the house buying market may cool in some areas, allowing house prices to reset.

“But predictions of a storm to come in the housing market are overblown. Despite the shock of that result, the fundamentals of the UK housing market haven’t changed and won’t change in the near future.

“Irrespective of whether we are in the EU or not, people need homes to live in and we still don’t have anywhere near enough of them.”

In England London lead the way on house price growth at 13.6% followed by the South East (12.9%) and the East of England (12.8%).

Showing more modest growth was the North East (3.2%), Yorkshire and The Humber, and the North West (4.3%)

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “House prices softened slightly in the build up to the EU Referendum, but we will only start to see the real impact of the vote to leave in the coming months.

“Annually, house prices have continued to increase well above the rate of inflation.

“What these figures really highlight is the fact that house prices have stopped rising at the heady speeds we have become accustomed to – not that they are falling.”

The UK House Price Index merged the Land Registry and Office for National Statistics indexes)

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