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Wind taken out of UK housing market as prices dip


05-10-2016

 

House prices fell 0.8pc in April after the buy-to-let surge in March
House prices fell 0.8pc in April after the buy-to-let surge in March

Halifax’s house price index recorded a fall of 0.8pc in prices in April from March which, combined with a fall in February, has offset the huge jump recorded in March as investors rushed to purchase before the stamp duty hike came into effect.

Economists at IHS Global Insight said that house prices would be “softer” for the next few months due to uncertainty over the EU referendum, and described the dip as the “wind being taken out of the housing market by stuttering UK economic activity and confidence”.

Martin Ellis, Halifax’s housing economist, said: “Current market conditions remain very tight as the severe imbalance between supply and demand persists. This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months.

"Weakening sentiment regarding house price prospects and a dip in consumer confidence, however, suggest that annual house price growth may ease.

Bristol houses

Halifax house price data is more volatile than other indices, but still shows a strong upward trend. In the three months to April, prices were up 9.2pc on the same three months a year earlier, and the average house price is £212,321.

Samuel Tombs, economist at Pantheon Macroeconomics, said that “the surge in March likely partly reflected some buy-to-let and second home buyers paying a premium to complete transactions before the increase in stamp duty - a property transfer tax - on such purchases on April 1.

“Price growth is set to remain robust, as recent falls in mortgage rates encourage homebuyers to take out larger loans, and banks continue to relax lending criteria.

“Meanwhile, the recent stalling of the recovery in housebuilding, as well as high moving costs and elevated house price expectations among homeowners, suggest that supply will remain scarce.

“Brexit fears might subdue prime London property prices, but previous bouts of political uncertainty have seldom depressed the whole market. As such, we expect price growth to remain strong, bolstering the case for higher interest rates to prevent household debts eventually reaching unsustainable levels.”

He added that the price growth was in line with the expectations of chartered surveyors at Rics, who expect a 2pc rise in the second quarter of 2016.

www.telegraph.co.uk/

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