UK house prices fall ahead of cuts to tax perks

London

BRITAIN'S housing market boom showed some signs of cooling in June as prices fell in monthly terms for the first time since January ahead of the scaling back of a tax break for buyers, mortgage lender Halifax said on Wednesday.

Prices were 0.5 per cent lower than in May, it said. In annual terms, they stood 8.8 per cent higher than in June 2020 after leaping by the most in 14 years in May when they rose 9.6 per cent.

"It is important to put such a moderate decrease in context, with average prices still more than £21,000 (S$39,100) higher than this time last year, following a broadly unprecedented period of gains," Halifax managing director Russell Galley said.

Last week, rival lender Nationwide said its measure of house prices showed a 13.4 per cent leap between June 2020 and June 2021, the biggest increase in over 16 years.

Britain's housing market has been spurred on by finance minister Rishi Sunak's Covid-19 emergency tax break for buyers many of whom were already seeking bigger properties as they increasingly work from home because of the coronavirus pandemic.

The tax exemption on the first £500,000 of any property purchase in England or Northern Ireland expired at the end of June. A £250,000 tax-free allowance will run until the end of September.

Mr Galley said demand from people looking for bigger homes would not fade entirely as the economy recovers and the shortage of properties on the market would also support prices.

Prices in London rose by a below-average 2.9 per cent in annual terms in June, slowing from May. All other regions of the United Kingdom, except for the Midlands, saw prices rise more quickly than in May. REUTERS