UK house prices slid in May following stamp duty tax hike

[LONDON] British house prices fell by more than expected in May following an increase in property transaction taxes the prior month, leaving values broadly flat for the year so far, figures from mortgage lender Halifax showed on Friday (Jun 6).

Halifax said house prices fell by 0.4 per cent in May after a 0.3 per cent increase in April. A Reuters poll of economists had pointed to a fall of 0.1 per cent for May.

House prices were 2.5 per cent higher on the year – less than the 3.0 per cent annual rise forecast in the poll.

Halifax said the housing market looked “broadly stable”, with the average level of house prices hovering around £297,000 (S$517,455) since December.

“The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty,” Amanda Bryden, Halifax’s head of mortgages, said.

Separate data published last week from the tax office showed residential property transactions rocketed by 62 per cent in March and then collapsed by a record 63 per cent in April, as buyers raced to close deals in March ahead of the stamp duty tax increase.

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“The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income growth and broader inflation trends,” Bryden said.

Financial markets on Thursday pointed to between one and two quarter-point interest rate cuts between now and the end of the year. A Reuters poll of economists published last month pointed to two such rate cuts. REUTERS