UK house prices decline for first time since June

London

UK HOUSE prices fell last month for the first time since June as a temporary cut in the tax on purchases approached its expiration date.

Values fell 0.3 per cent from a month earlier to an average of 229,748 pounds (S$418,668), Nationwide Building Society said on Tuesday. They climbed 6.4 per cent from a year earlier, slowing from 7.3 per cent in December.

Housing defied the economic malaise of the pandemic last year, booming amid pent up demand after the spring lockdown closed the market and after the government suspended the levy known as stamp duty.

Analysts are now divided on predictions for 2021, with the outlook clouded by an expected rise in unemployment and the end of the tax break.

Property website Rightmove anticipates that asking prices will climb 4 per cent, while Halifax says they could slump as much as 5 per cent.

"If the stamp duty holiday ends as scheduled and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months," said Nationwide's chief economist Robert Gardner.

The government is coming under pressure to lengthen the tax suspension, with a petition calling for a six-month extension having garnered 140,000 signatures. During a debate on Monday a succession of lawmakers backed the move, saying it would help their constituents in the process of moving, keep the housing market buoyant and aid the economy.

In response, Financial Secretary to the Treasury Jesse Norman said that the government is aware of the strength of feeling on the issue but said he was unable to comment on tax policy before March's budget. Still, he pointed out the holiday had been successful partly due to its time-limited nature. REUTERS