British house price rises picked up speed last month and households recovered some confidence, which had plunged after June’s Brexit vote, according to surveys that added to signs of calm among consumers after the unexpected referendum result.
However, the increase in house prices was largely driven by a shortage of homes on the market and the outlook depended on longer-term impact on the economy of the vote to leave the EU, mortgage lender Nationwide Building Society said.
Prices rose 5.6 percent compared with the same month last year, faster than July’s 5.2 percent. Economists polled by Reuters had expected house prices to rise 4.8 percent.
In monthly terms, house prices rose 0.6 percent, from an increase of 0.5 percent in July.
“The pickup in price growth is somewhat at odds with signs that housing market activity has slowed in recent months,” Nationwide economist Robert Gardner said.
The Bank of England on Tuesday said that mortgage approvals in July fell to their lowest level since January last year.
Gardner also said demand for housing had fallen, hit by the introduction in April of a new tax on homes bought by landlords, but the drop appeared to have been matched by weak numbers of homes being put up for sale.
“What happens next on the demand side will be determined, to a large extent, by the outlook for the labor market and confidence amongst prospective buyers,” he said.
A survey published earlier yesterday showed consumer morale last month recovered some of its post-Brexit slump.
Market research firm GfK said its gauge of consumer confidence rose to minus-7 last month from minus-12 in July, when it suffered its sharpest drop in more than 26 years.
However, last month’s level was still the second-lowest since early 2014.
The improvement was in keeping with recent data suggesting consumers have remained resilient after the referendum, even though there have been some indications that they are more reluctant to make big purchases than before the vote.
“While material uncertainty remains, the modest rise in confidence suggests that households do not expect a worst-case scenario,” Barclays economists said in a note to clients. “That said, lower confidence with respect to before the vote remains broadly consistent with our macro scenario of consumer spending slowing materially, but gradually next year.”
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