SUMMARY

House prices rose 0.3% in July, according to Nationwide, leaving annual growth also at 0.3%. This broadly flat national average hides the regional variation, with strong growth in the Midlands and Wales balancing out the falls in London and the South. It now looks likely that the UK will see zero average house price growth in 2019, undershooting the 1.5% growth we forecast last October, which assumed an orderly Brexit in March as per major economic projections at the time.

This zero price growth matches the latest RICS survey results, which saw roughly even numbers of surveyors reporting prices rising as falling. But there are greater signs of optimism, pointing to stabilising market values and volumes. More surveyors are now reporting price rises than at any time since August 2018. They are also showing increasing optimism in activity levels, with a narrow majority seeing rising numbers of both inquiries and instructions for the first time since last summer. This is supported by Land Registry transaction figures, which, while still declining, have been falling at a reduced rate over the past few months.

This modest strengthening in activity suggests some buyers and sellers gave up waiting for Brexit, following agreement of the current extension in April. Many buyers simply cannot delay moving indefinitely but will attempt to avoid peaks of uncertainty. The next is obviously the October Brexit deadline, when it is far from clear what will happen: Brexit with a deal, without a deal or a further extension. What actually happens will determine the speed and strength of any boost to activity levels. But as long as any lack of demand is matched by low numbers of people wanting to sell, prices are unlikely to see a major change.