UK house prices fell in April after a surge of rental investors rushing to beat a tax change bolstered the market earlier in the year, according to the Halifax.
Average values dropped 0.8 per cent from March, the mortgage lender said on Monday. That reduced the annual gain to 7.8 per cent from about 11 per cent. On a less-volatile quarterly basis, prices rose 1.5 per cent from the previous three months.
Prices were boosted this year as a shortage of homes for sale was exacerbated by buy-to-let landlords and prime property investors trying to beat a stamp duty increase on second properties. While a cooling economy and uncertainty surrounding the United Kingdom's European Union referendum next month may damp the market, the fundamental forces of falling unemployment and low borrowing costs will continue to support prices once short-term factors have faded, according to the Halifax.
“Current market conditions remain very tight as the severe imbalance between supply and demand persists,” said Martin Ellis, an economist at the Halifax. “This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months.”
Mr Ellis also said that “weakening sentiment” toward house-price prospects and a dip in consumer confidence mean that annual gains may ease.
The British chencellor of the exchequer, or finance minister, George Osborne said on Sunday that homeowners would face a "significant hit" from lower house prices and higher mortgage costs if voters decided to leave the European Union in a so-called "Brexit" in the June 23 vote.
“This isn’t just a big question about who we are as a country. This goes to the heart of people’s financial security,” Mr Osborne said.
“I am pretty clear that there will be a significant hit to the value of people’s homes and to the cost of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU.”
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