House prices rose in the run-up to the EU referendum despite the uncertainty surrounding the vote, according to official Government figures.
The ONS’s house price index revealed that house prices increased by 8.7pc in the year to June, up from May's growth rate of 8.5pc.
However, these figures take into account only one week of house-buying activity after the EU referendum. A survey last week by the Royal Institution of Chartered Surveyors indicated that activity in the housing market has slumped, with the smallest number of homes on the market in three years.
Richard Snook, senior economist at PwC, said: "We expect that the vote to leave the EU will have a significant impact on the housing market. In our main scenario, average UK house property growth will decelerate to around 3pc this year and around 1pc in 2017. Cumulatively, our estimates suggest average UK house prices in 2018 could be 8pc lower than if the UK had voted to stay in the EU."
The east of England replaced London as the area with the fastest house price growth, at 14.3pc in the year to June, compared to 12.6pc in the capital, and 12.3pc.
The area where house prices jumped the most was Na h-Eileanan Siar, in the Outer Hebrides, at 28.1pc - data from this part of the UK can be volatile due to the low numbers of transactions. The second highest was Slough, in Berkshire, at 24.6pc, where house prices have been climbing for months thanks to a number of new developments in the area and infrastructure projects such as Crossrail.
The biggest fall in house prices was in Aberdeen, which has been hit by low oil prices. The Granite City was followed by Kensington and Chelsea, where house prices tumbled 6.2pc. It has been hit by a slowdown in London's property market, especially in the luxury end.
The average house price in the UK was £214,000 in June - £17,000 higher than 12 months previously.
John Goodall, chief executive of Landbay, the peer-to-peer mortgage and investment platform, said: “Brexit uncertainty alone was not enough to derail the UK housing market in June, as prices continued to rise steadily. High demand drove the uplift in prices, with mortgage lending volumes jumping 16pc in June alone.
"Of course all eyes will be on next month’s figures, and early indications suggest house prices growth cooled slightly in July, but if we do see an impact of the Brexit decision it will take some time to surface.
“What we do know is that the fundamentals of the property market are built on pretty immovable foundations; people always need a home. A growing UK population and record low mortgage rates will swell demand, and efforts to tackle the supply side are moving at a snail’s pace although Theresa May has suggested housebuilding is high on the agenda.
"All this will continue to drive up prices, and make it even more critical that the UK has a healthy and accessible buy-to-let market to support those that choose not to or cannot buy a property outright.”
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: "There is no doubt that there is too much concentration on pricing and not enough on transactions. House prices have been rising mainly because of shortage of stock.
"Volumes will be affected by uncertainty at least until September when buyers and sellers start returning from holiday and think about their next steps. Transactions are more important than headline prices as it is important for the health of the market that people are moving and there is plenty of activity. This has more impact on the economy than what is happening with house prices."
