U.K. house prices rose the most in five months in August as a shortage of supply supported values even amid weaker demand.
Prices rose 0.6 percent from July and were up 5.6 percent compared with a year earlier, Nationwide Building Society said in London on Wednesday. In the past three months, values have risen 1.1 percent, taking the average to 206,145 pounds ($270,000).
“The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months,” said Nationwide Chief Economist Robert Gardner. “However, the decline in demand appears to have been matched by weakness on the supply side of the market.”
“It ought to be pension but it’s almost certainly property,” he told the Sunday Times. “As long as we continue not to build anything like as many houses in this country as we need to meet demand, we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.”
In the near term, surveys have suggested that Brexit is having an effect on the property market, undermining demand and sales. The BOE said on Tuesday that mortgage approvals dropped to an 18-month low in July.
Nationwide said the outlook for housing remains clouded. While consumer data has held up, weaker business surveys suggest a slowdown, which could have have a negative impact on the labor market and household confidence, it said.