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UK property market set to stay subdued as election deals blow

[LONDON] Britain's shock election result took its toll on the property market last month and the slowdown is likely to continue through the rest of the year, according to a survey published Monday.

The most sluggish July in five years saw house prices in England and Wales slip by 0.2 per cent from June to an average of £298,906 (S$528,756) as political and economic uncertainty unsettled buyers, the report by Acadata and LSL Property Services Plc found. It left the annual rate of increase at just 2.9 per cent, the weakest since July 2013.

The report adds to signs that housing market is faltering as Brexit jitters and the squeeze on consumers from faster inflation cast doubt over the economic outlook. Acadata blamed the weakness last month on the June election, which saw Prime Minister Theresa May unexpectedly lose her parliamentary majority, and the continuing effect of a tax hike introduced last year.

"This slowing of the housing market is likely to continue through the autumn and onwards to winter," the report said. "Any seasonal upsurge in the former is likely to be muted, reflecting the more complex market conditions that now exist." While the summer is traditionally a quiet time in the housing market, the number of properties changing hands dropped by 9 per cent from June to their lowest level for any July since 2012. House prices have fallen in each of the past four months, according to Acadata.

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A regional breakdown for June shows London and the southeast, which have seen the biggest gains in recent years, performing worse than other parts of the UK. The capital saw prices decline for a third consecutive month, with values down 1.5 per cent, the second-biggest drop in over six years.

The biggest losers were some of the wealthiest boroughs including Westminster, where prices plunged 11.6 per cent. Values in the City of London, home to the financial-services industry, fell 8.2 per cent and were down almost 18 per cent from a year earlier. They also slipped on the month in Kensington and Chelsea, Britain's priciest district where homes cost £1.95 million on average - three times that of London as a whole.