UK house prices fell 1% in month after Brexit vote

UK house prices fell in July, said Halifax in its monthly index. The average price dropped by 1% month-on-month to £214,678 in the aftermath of the EU referendum, which saw voters back Brexit. But Halifax warned the monthly figures can be "erratic".

Over the year, the average UK house price rose 8.4%, though this was the lowest annual rate of growth since July 2015. The quarterly increase was 1.6%, faster than June's three-month growth rate of 1.1% but well below the recent peak of 3% in February.

"There are signs that house price growth is slowing with a deceleration in both the annual and quarterly rates of increase in the past few months," said Martin Ellis, Halifax housing economist. "Nonetheless, the current rates remain robust... Overall, it remains too early to determine if there has been any impact on the housing market as a result of June's EU referendum result."

There are fears that the vote for Brexit will drag the economy into recession as the economic and political uncertainty weighs on investment and demand. In response to data suggesting a slowdown may be imminent, the Bank of England cut its base interest rate in half to the new all-time-low of 0.25%. It also boosted its stimulus package by £170bn.

Lower interest rates should help support demand in the housing market if any downturn materialises, as will the schemes targeted at lifting first-time buyers onto the property ladder, such as Help to Buy and shared ownership. The ongoing lack of housing supply should underpin house prices, though their growth is widely expected to slow over the coming months.

A Treasury analysis of Brexit released before the referendum claimed a severe economic downturn could clip house prices by as much as 18% on average, though some dismissed this as scaremongering by a government in favour of remaining inside the EU.